Approaching the holidays without a budget can lead to overspending and a debt hangover. Try these holiday budget planning tips from EP Wealth Advisors for managing your spending this season. Find a financial planner near you.

Mastering Holiday Budget Planning: 5 Tips to Manage Spending this Season

The year is winding down, and it’s time to consider holiday spending. Between gifts, entertaining, and travel, this can often be the most expensive time of year. Try these holiday budgeting tips from EP Wealth Advisors to stay focused on your financial goals and hopefully avoid a debt hangover.

1. Review Last Year’s Spending

The first step is to reflect on how much you spent last year for the holidays. Review bank and credit card statements from this time last year, which should be available online. These numbers are a good starting point for this year’s budget. Just be sure to increase these costs slightly to account for inflation. Over the last 12-month period, the price of consumer goods and services has increased by 2.5 percent, according to the U.S. Bureau of Labor Statistics.

2. Inventory Holiday Expenses

Next, make a detailed list of your holiday expenses. Create separate categories for gifts, travel, dining, clothing, and decorating. Be as detailed as possible to try to potentially avoid unexpected expenditures.

Do you hire an outside company to decorate your home or cater your annual holiday party? Include these costs in your budget. If you travel for the holidays, remember to account for gas, hotels, and airfare.

Next, make a list of everyone you are buying for. Looking back at last year’s financial statements will also be helpful here. Are you adding (or omitting) someone from your gift list? Adjust your gift budget accordingly.

Don’t forget to include gifts for the people you want to show appreciation for at the end of the year, from your postal carrier and cleaning service to your hairdresser and landscaper.

If charitable giving is an annual tradition, include these donations in your holiday budget as well.

3. Decide How to Cover Holiday Expenses

How are you going to pay for holiday expenses? You have a few options. The most obvious is to pay these costs out of your monthly income, tapping into savings if needed. If you do, be sure to replenish these funds in the future.

If you have credit cards with rewards, consider using them for holiday spending to earn points towards cash back, airline miles, and other rewards. Pay off monthly balances to avoid interest charges and minimize unnecessary debt. Don’t forget to review which of your credit cards give more points for the type of purchases you are making to maximize rewards.

It can be helpful to discuss high-dollar purchases like luxury gifts or vacations with your EP Wealth financial planner to learn the pros and cons of different payment options based on your situation.

4. Track Your Spending

As you start holiday shopping, track your spending as you go. Save receipts and compare them to your holiday budget to see where you overspent or spent less than anticipated. This way, you can prepare for the next holiday season.

Print out credit card statements, bank statements, and other documents and store them somewhere handy to revisit this time next year. Being mindful about how and what you spend positions you to remain aligned with your short and long-term goals.

5. Check In With Your Financial Planner

The holiday season is ideal for meeting with your EP Wealth advisor to plan for the year ahead. During your annual financial review, you will discuss any major life changes that occurred during the year, like a new job, child, partner, or business venture, and how they impacted your finances.

With insight and support from EP Wealth, you can manage your spending this holiday season and look forward to a rewarding year ahead. Contact EP Wealth to work with a financial planner near you.

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