How To Budget for the Holidays, According to a Financial Expert

Ready or not, the holiday season is here. And while this time of year is filled with cheer, it’s also notoriously expensive. Between all the gift giving and festivities, it’s easy to lose track of our finances. And when it comes down to it, we’re all liable to fall victim to the frenzied excitement of the season. Which is why the idea of being able to correctly budget for the holidays often feels like nothing more than a pipe dream.

That said, there is nothing joyful about mentally preparing for the inevitable dent the holidays will put in your wallet. And stressing over money only takes away from the most wonderful time of the year—which is why I sought the help of financial expert Marsha Barnes.And I got the chance to ask Barnes my most burning questions on all things holiday shopping, from budgeting to gift giving and everything in-between.

Whether you’re going out of state, meeting new people, or keeping things low-key, these expert-backed tips can help you set yourself up for financial success this holiday season. Keep scrolling to learn how to budget for the holidays, in the exact words of financial expert Marsha Barnes.

1. Things add up quickly in life, but it seems like this is especially true around the holidays. As a financial expert, why do you think it’s so easy to blow money during this time? Have you ever fallen victim to the frenzied excitement of the season?

Marsha: “Naturally, many of us are drawn to the bright lights, feel-good music, and charitable spirit enticing us to gift and give to causes near and dear to our hearts during the holiday season. I am also a victim to the frenzy of the holidays. However, throughout the year, I squirrel money away that I can use to celebrate the season.”

2. Although finances aren’t a one-size-fits-all and there is no one “right” way to handle money, are there still some general tips that everyone can follow when it comes to budgeting during the holiday season? What advice do you have for those holiday shopping while currently working to get out of debt?

Marsha: “Since the holidays happen the same time each year, this makes it much easier to plan for. A few general tips to help prepare for the season include:

• Opening a specific savings account dedicated to holiday shopping. Throughout the year, allot money and deposit it into this account, it can be either monthly or each pay period, to be used for seasonal spending.
• Take advantage of and utilize credit cards that offer cash rewards on all purchases, especially those that don’t have blackout periods. The Wells Fargo Active Cash^® Card is a great option that also features a $200 cash rewards bonus when spending $1,000 in the first 3 months.”

3. What steps can we take throughout the year to help ensure we’re better financially prepared for the holidays? Is there anything we should be doing daily?

Marsha: “It’s extremely important to identify how you desire to celebrate, minus the feelings of what others are doing. Would you prefer to explore cooking a nice dinner for friends and family? Do you find value in giving cards with a handwritten note, or do you go all in with purchasing gifts for everyone? Each month, it’s a best practice to evaluate your spending budget and decide what funds can be allotted for holiday shopping. While it’s not essential to do this daily, monthly monitoring is mandatory.

Some questions to ask yourself include:

• Who or what causes do I plan to give to?
• What funds will I use?
• What credit card will I use? Does it offer benefits such as cash rewards on all purchases and no blackout periods, like the Wells Fargo Active Cash^® Card? (you don’t have to wait until the holidays to shop for the holidays). 
• What does giving look like for me (giving gifts, spending time with loved ones, cooking, etc.)?“

In conclusion…

Budgeting for the holidays may seem intimidating or overwhelming, but it doesn’t have to be. It’s especially important to remember to stay true to yourself and your holiday wishes—not the wishes of others. Prioritize spending and celebrate how you want to. Do your research and take advantage of credit cards with cash back rewards that can go towards future purchases and help you save.

In addition, try your best to plan throughout the year for the holidays. Doing things like evaluating your monthly budget or opening a savings account for holiday purchases and depositing money into it throughout the year can be extremely helpful. Regardless of whether you do it this year or next, your finances will thank you in the end. At the end of the day, taking care of your financial health is wealth.