Holiday budgeting in three easy steps

Note: This guest blog post was provided by Casey Walters over at

More often than not, we as Americans typically spend more money during the holiday season than any other time of the year. The main problem we encounter is the ever-increasing issue of how to pay for the holiday season.

Most of us consider taking advantage of Black Friday deals to be the ideal way of being frugal with our money. While this can be a great way to save, it’s only effective if you’re armed with a strong plan of action that won’t leave you deeply in debt after the holidays.

Tip 1: Create a budget

In my experience advising people, or even in corporate finance, the number one key for allocating money and saving is to create a budget and stick to it.

You don't have to create an elaborate Excel financial model but what you need to do is sit down as early in the year as possible and write out all the people you need to buy gifts for. Also write down other things you need to buy such as the holiday dinner, gift paper, travel expenses, etc.

After you write down all of these expenses you have set the foundation for success. You then allocate a certain amount of money to each item you have listed. After that add up all the numbers and then you have a grand total you need to save/budget for to pay for the holidays. When you sit back and look at each line item create a worst case scenario because you never want to exceed the line item budget.

Tip 2: Time — either your friend or your enemy

As mentioned in the first tip, the creation of the budget as early as possible is the key to success. With a longer time frame you have the ability to save for how much you plan on spending on the holiday season. It’s easier to store money over a period of seven months versus two months.

Tip 3: Financing the holiday season

After you have the time frame and overall figure, it’s time to figure out how you plan on paying for everything. I always suggest never utilizing credit card debt, as carrying a balance forward each month negatively affects your FICO credit score.

It is always best to save an equal portion of your monthly income to create a growing balance that will be used for the holiday season.

If you have to save more than expected, you need to either cut back in other expense areas or reduce your budget line items, but remember to hold yourself to the budget/savings goal.

Bonus Tip: Make money while buying for the holiday season?

As mentioned earlier I never carry a balance on the credit card going into the next month. Something I do recommend is if you can pay for the entire balance of the planned purchases then utilize a rewards credit card.

It’s not uncommon to get not only a discount for shopping online using a rewards credit card but you could make anywhere from 1 percent to 5 percent cash back on that purchase. Why aren’t you putting your money to work for you?

Final Thoughts

Regardless of your budget always spend what you can afford and never compromise your future by going deeper into debt especially in our current economic situation.

Now that you’ve read what I suggest what has been working for you? Do you agree or disagree with what I have presented? Any tips I have missed? I want to hear from you with your comments.

About the Author

Casey Walters has several years of experience in both financial advising and corporate finance. He has worked for a Fortune Global 500 firm and was responsible for more than $40 million of the firm’s budgetary stance. Currently, He is a senior financial analyst for a growing communications company.

Jessica Horton is a former copywriter and community manager at MMI.