Budgeting for the festive season
The festive season is around the corner. It’s the season of giving, which basically means it’s the season of spending. So, if you are not careful and smart with your finances, your bank balance is bound to take strain. Don’t let your savings account suffer — a budget can help you with that and more. Here are 5 important reasons for you to start thinking about your holiday budget.
- A budget can help you to plan your spending
The feel-good factor of the festive season means many people are inclined to spend far more than they should in December, only to suffer heavy financial headaches when January appears. You need to stay in control of your finances so that you avoid getting yourself into debt, and a budget will help you achieve just that. If you can plan for something, you can anticipate when it will happen and how much you need to allocate towards it. Your gift buying, travel plans, entertainment and other festive season expenses will be accounted for, making it easier to resist the temptation to spend money on all the sparkly, unnecessary stuff designed to catch your eye this time of year.
- A budget can help you find easy ways to save money
When you make your savings account a part of your budget, you know that there's money available to help you in a financial emergency. If you're one of those people who already have their entire list of December activities planned out, a budget can help you to save for those expenses too.
By budgeting, you’re able to put money away in something that will benefit you in the future, like tax free savings accounts. At the same time, you’ll be able to leave yourself some money to merrily go through December without the fear of digging yourself a big financial hole. Automate transfers into your tax free investment account to protect yourself from the temptation to spend. African Bank’s Tax Free Investment account offers market-leading rates that will grow your money — your original interest rate never drops, but you stand to benefit if the interest rate increases.
- A budget can bring the family together
It's never a bad idea to include your family members in creating your holiday season budget. This helps to make sure everyone works together towards achieving a family goal. This can also be an eye-opening experience for the younger members in the family — make them a part of the experience so that they can learn that money is earned through hard work and that reckless spending has consequences.
- Helps you to stay on track with your financial goals
Are you finding it hard to reach your financial goals, especially during the festive season? This is where a budget can benefit you. You might have been saving for a down payment on a house, or a deposit for your first car — it's important to keep those financial goals in mind when enjoying your holidays. A budget can help you to be in control of your finances by enabling you to make better sense of your priorities. It puts a money-saving strategy in place, one that is easy to follow and forces you to only spend money on what matters most.
- A budget can help you to avoid debt
Nobody wants to start off a new year with a hefty debt that they will have to pay off for an entire year. That's where a budget comes in. By having a budget before the holiday season starts, you can plan your spending according to what you can afford and stay on track when it comes to your financial goals.
So how do you get your holiday season budget started? Here are three very simple steps.
- Create your list of expenses
Begin by making a list of all your expected holiday expenses. This list must include your monthly bills, so that you don’t forget to keep up with these payments in December. In addition, tally up expenses such as Christmas gifts, meals, entertainment and traveling expenses.
Once you have created your list of expenses, review your income and match it against your expenses. This will give you a clear picture of what you will be able to afford over the festive season. If your expenses far outweigh your income, simply decide which expenses are most important and allocate money there first.
- Prioritise your saving
Ideally, the goal should be to save ass early as January for December expenses. The longer you save, the more money you will have to play with. However, you can kick-start your savings at any time of the year – rather have something saved than nothing at all. Savings should be a priority item on your list of expenses.
Now, if you’re thinking to yourself, 'where should I invest my money?' you are spoilt for choice. For the best returns, find an account with the best savings account interest rate. This will not only keep your money safe, but help it to grow as well.
- Track your spending
Once you begin the holiday season, keep track of all your purchases. Bring your gift list, along with your budget sheet, to every shopping trip. Additionally, be sure to keep track of the cost of your holiday-related outings and other spends, so you will be able to budget more accurately next year.
Preparing for the holidays early will not only help you save money, it will also save you from the stress of facing January with empty pockets.