Setting up a realistic holiday budget

Always ensure you have a Christmas budget (Photo: iStock) The holiday season is around the corner. And even though most people say it is the best time of the year, your bank account might not support your plans. With people still reeling from the effects of the Covid-19 pandemic, finances are tricky to plan. Many expenses are coming your way - it could be gifting your loved ones or planning an expensive affair like party hosting or travelling. If you are not careful, your expenses could go beyond the intended budget - which is bad for your wallet. According to a survey by ATOL, "the average family spends more than 17 per cent of what it budgeted for its holiday in unexpected costs." The study also discovered that "61 per cent of holiday-goers struggle with budgeting." However, as stressful as it may seem, there are ways you can control your spending habits while still getting to enjoy the holiday season. For any successful event, preparation is crucial. Planning early helps you set the right priorities for your holiday expenses and understand your spending limit. "There are lots of advantages to starting your holiday savings earlier. You will have more flexibility in how much you need to save each week or month, "Nerd Wallet, a finance company writes on its blog. SPENDING LIMIT It adds, "Saving in smaller chunks over a longer period can make it easier to meet your goal if your budget is already tight. Reflecting on your last year's holiday expenses will give you a good idea of what you can expect this year. To determine my budget for the holiday, I like to take an inventory of what happened the year before and allow that to help me build the budget for this year," Tania C. Foster, a financial advisor told CNBC. Know your spending limit. Most people get stressed during the holiday season due to budget constraints. As a result, they end up drowning in debts come the next year. It is okay if you do not have money to throw parties or buy expensive gifts. Set a budget for yourself, and do not be afraid to tell your children that the toys they want cost too much. One of the major expenses for any holiday is entertainment. If you are planning to host a party, you might want to consider how to save on food - arguably the most important part of any good get-together. To save on your food budget, stock your pantry with an array of appetisers and easy party snacks. Most of these snacks are affordable and can keep your guests full throughout the day. Another easy way to cut food expenses is to make it a potluck, where each guest brings one dish. This will significantly reduce your budget and workload. If you plan to have alcoholic drinks, your budget will most likely spike. And while alcohol can be expensive, there are some ways you can cut down on the cost. When you offer to prepare the food, ask each guest to bring their own bottle. However, if you choose to buy the drinks, go for the inexpensive ones. There is plenty of good and affordable alcohol. If you have a larger crowd, buy the alcohol in bulk. Consider having a themed party, which helps save on cost as you avoid wasting time and resources planning for the perfect party. In addition, since you do not have to start from scratch, a themed party helps you know in advance what you will need, thus sticking to a budget. SMART WORKAROUNDS Lastly, limit your guests. Do not invite all your family members, friends, and colleagues if money is an issue. A smaller intimate party is always more manageable and budget-friendly. Try and stick to a party of about 15 to 30 people to save on cost. The Covid-19 pandemic limited most travel lovers over the past two years, and now, with most restrictions lifted, many are eager to fly or drive to their favourite destinations. Besides, heading to an ideal tourist attraction point or going upcountry to visit family will pack the season with lifelong memories. Save on travel costs by avoiding travel agents if you are planning to fly outside the country, as they are normally more expensive. Most experts advise booking early as travel companies tend to offer good holiday packages for the early birds. Equifax, a credit company, reports, "When booking accommodation or transportation like flights or train tickets, you will find that you may get better deals if you are flexible with the day and time that you are willing to travel." "Travelling off-peak could save you money. Price comparison websites can also give you a range of choices based on different budgets."

Setting up a realistic holiday budget

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