Why it helps to think about your holiday budget now
Late October might feel too early to think about New Year and Christmas spending. But this is actually a good time to make a simple spending plan. When the plan is ready early, you will not need to reach for a credit card or a quick loan in December just to finish buying gifts.
The holidays bring joy, but also costs: gifts, a festive table, decorations, maybe a trip to see family. If these costs are not planned, they easily go over a normal monthly budget and leave behind debt that takes months to pay off.
Work out what the holidays really cost
Take a sheet of paper or open notes on your phone. Write down every type of cost that usually comes up before the New Year and Christmas:
- gifts for family, friends, colleagues
- festive food and drinks
- decorations, a tree, lights
- possible travel to see family in another city
- clothes or shoes for holiday events
Next to each item, write a rough amount. Even a rough number is better than nothing: it already shows the total sum you will need by the end of December.
Split that total across the weeks you have left
Once you know the total, divide it by the number of weeks left before the holidays. For example, if you need to set aside 6,000 (in your local currency) and there are 10 weeks left, you would need to save around 600 each week.
This feels much calmer than looking for the whole amount at once in December. Small amounts are easier to fit into a normal budget, and there is no need to borrow money at the last moment.
If you can, keep the money you are setting aside in a separate savings account, not together with the money you use for everyday spending. That way there is less temptation to spend it early by accident. Some banks offer short term deposits or savings accounts with interest: you can compare options, for example, in the best savings and deposit accounts section.
Why it is worth avoiding "buy now, pay later" for the holidays
Before the New Year, shops and online services often offer instalment plans or "buy now, pay later" deals (this means you get the item right away and pay for it in parts afterwards). It looks convenient, but it is still debt, even if the word "credit" is never mentioned.
The main danger is that several of these instalment plans at once are easy to lose track of. In January, once the holidays are over, the bills for them still need to be paid, and by then there is no festive mood left to make it easier.
A simple rule of thumb: if you cannot afford a gift or a purchase right now, it is better to lower the amount you spend on it, or start saving earlier, than to take on an instalment plan or a loan for holiday spending.
Sales, and planning around possible disruptions
Before the holidays, many shops run sales, especially toward the end of November. A discount can look like a great deal, but it is worth checking whether the price is actually lower than usual, rather than quietly raised just before the "sale" began. It helps to compare the price with what the same item cost a few weeks earlier.
It is also worth keeping in mind that power or internet outages can happen during the colder months. If you are planning large purchases online or by card, keep a little cash on hand in case the internet or a shop's card terminal is temporarily down. This is not a reason to worry, just sensible preparation.
What to do about gifts if money is tight
A gift does not need to be expensive to be meaningful. You can agree with family or friends on one shared gift instead of several separate ones, or set a modest spending limit that applies to everyone. This takes the pressure off and helps everyone stay within budget.