Mortgage Advice

4 Tips for Smarter Holiday Budgeting

November 10, 2017

The holidays are just around the corner, and soon shoppers will be hitting up stores for the hottest deals of the season. To help keep your finances off the naughty list – especially if you plan on purchasing a home next year – follow these four tips for smarter holiday budgeting.

1. Create a holiday budget, and stick to it

During the holiday season, it’s important to evaluate your finances and create a budget. This can be done by taking into account all the money you bring in each month, factoring out the amount that goes towards bills, and saving what’s left over as disposable income for holiday shopping.

It’s one thing to create a holiday budget, but it’s another to stick with it. If you don’t think you can rely on self-discipline alone, there are a variety of expense-tracking and budgeting apps to help keep you on the straight and narrow.

2. Make a list (and check it twice)

Once you’ve determined how much you’re able to spend on holiday shopping, make a list of all the people you plan on buying gifts for. After the names have been written out, allocate a certain amount for each friend or family member until your target budget has been exhausted.

Pull a page out of Santa’s book and double-check your list to ensure you didn’t miss any names, and that the budget allocation is correct. Having a preset amount to spend on people not only helps you stay within your financial means, but it also eases the stress of holiday shopping.

3. Scout out the deals

If you want to get your friends and family the best possible presents within your holiday budget, then your best option is scouting for deals. If you have a gift in mind for someone, make sure you’re doing your research by comparing prices at different stores in your area (or online), instead of just buying it at the first store you visit.

You can also sign up for email alerts from your favorite retailers to get wind of big sales. If you prefer online shopping, browser extensions like Honey or Capital One Shopping (formerly Wikibuy) automatically search for and apply the best discount codes for your item.

4. Spread your holiday budget over several credit cards

Credit cards are the payment method of choice for holiday shoppers. This isn’t a problem, so long as you’re aware of how much you’re charging to your card with each swipe. Try to keep the balance on your credit card below 50% of the total available credit limit.

To prevent yourself from maxing out each credit card, it’s a smart idea to spread your holiday spending over several credit cards to keep the balance below the 50% mark on each. Doing this also helps stagger when payments are due, so you can feel more confident that you’ll have enough to pay off the full balance.

After the holidays are over, try to get your balance back down to 5-9% of your limit to get the best credit score possible, especially if a house (or other large purchase) is expected in the months to follow.

What are your tips for smarter holiday shopping? Leave your suggestions in the comments below!