Budgeting for the Holidays
Open a new bank account to manage holiday expenses
It's easy to get caught up in the spirit of gift-giving during the holiday season. However, there's more to holiday expenses than just presents. With parties for hosting and presents for shipping, you may want to consider setting aside funds throughout the year to cover not only gifts, but also other holiday costs. Start by creating a holiday budget based on your spending habits last year and any expected spending this year. Then, you may want to open a new bank account just to prepare for those specific holiday expenses. Keep reading for a few ideas about what should be included in your holiday budget, and find out how an interest checking account can help you stay organized.
Common costs to prepare for with your holiday budget
Whether you'll be traveling or hosting family and friends, there are many common expenses to consider when budgeting for the holidays. We've highlighted just a few that you might overlook in the spirit of the season. Whether you use our tips to trim down these costs or just to plan for them accordingly, being aware of where you spend and how much you spend can help you save.
- Cards and postage. Sending holiday cards is a great way to keep in touch with distant loved ones. However, paying for cards and the necessary postage can add up. This is especially true if you choose to have a family holiday portrait taken for your cards. Instead, you can save a bit if you choose to make cards yourself or have a friend take the photo. While you'll still need to spend money on paper, ink, envelopes and postage, it may be much cheaper than buying pre-made cards.
- Mailing gifts. In addition to holiday cards, you may need to send gifts through the mail, especially if you aren't able to travel to see loved ones. It's still possible to save on this holiday expense if you can consolidate shipments, order during a free-shipping offer or get a 'one price fits all' box instead of paying for the weight of the package.
- Travel. Whether you're visiting relatives and friends or hosting them at home, travel will significantly impact your holiday expenses. This is especially true since the cost of airline tickets and accommodations for out-of-state travelers increases during the holidays. You may also need to budget for a rental car, gas, optional rental insurance and roadside assistance service.
Depending on where you're going, you may choose to drive to your destination, which could save you money. However, you'll still need to consider the cost of gas, tolls and roadside assistance. For a potentially more affordable option, consider alternate transportation like a bus or train. If you're staying home and hosting visitors, make sure you budget for increased utilities and a higher grocery bill.
- Decorations inside and outside your home. It's easy to find yourself buying new strands of light each year, especially if a bulb or two have burned out and you can't find replacements. You may even plan for the expense, but did you plan for the increase in your electric bill? From awe-inspiring outdoor light displays to keeping the Christmas tree lit, holiday lights can be costly. Plus, on top of lights and electricity, you may find several ornaments or decorations are old or damaged and need to be replaced. Or, perhaps you just want something new! Planning for new festive décor, lights, and increased electricity costs in your budget can help you better manage unexpected holiday expenses.
- Host gifts and potlucks. Who doesn't love a holiday party with friends, family and a little mistletoe? Proper etiquette suggests the purchase of host gifts when you're visiting - unless gift-giving is already on the agenda for the evening. (Even then, a small gift like a mug with tea or hot cocoa shows you appreciate the time your host put into the evening.) Whether it's a bottle of wine or a new serving dish, you could easily spend $25 or more per visit. Plus, if the party is a 'potluck' (a great way to save money if you're hosting), make sure you plan for the cost of a dish to pass.
- Gifts for co-workers, teachers, friends and others. If your place of employment holds a holiday gift exchange or toy drive, or if you want to buy gifts for your children's teachers, your mail carrier or your newspaper delivery person, make sure these are also included in your budget. These can often arise as a last-minute decision, and you may not have room in your holiday funds for them. If you didn't budget for these gifts, consider making something or just sending a card to save money. If your friends are giving gifts and you can't afford to do something for everyone, propose a White Elephant exchange. Everyone brings something they already own, or purchased for under $5, and picks a gift randomly - you can even 'steal' a gift away from someone and he or she gets to pick again. It makes for a fun evening!
Manage your budget for holiday expenses with online banking
It's important to create, set, and stick to a holiday budget. Keeping the above costs in mind (and any extras you may anticipate), make a list of the most important holiday expenses. Then, leave a small cushion in your budget for last minute purchases that come up. Whatever you don't spend can always be set aside for the next holiday season. Throughout the year, make monthly deposits in the interest checking account designated for your gift-giving and miscellaneous holiday expense budgets. With online banking from Citizens Bank, you can simplify your banking experience throughout the year and during the holidays by easily (even automatically) transferring funds from one account to another, paying bills, or sending money to anyone. Stay on top of your holiday budget and you'll be better prepared for planned (and unplanned) holiday expenses.