Your holiday spending extends beyond gift-giving—you also need to consider the cost of food, drinks, decor and all those travel expenses. It’s basically the season of spending money. And that’s okay. It is what it is. You could try to reimagine your holidays as something different, but we are creatures of habit, and our habit is to spend a lot on and around the holidays. What you should focus on is planning ahead. You may stash a little extra cash for gifts, or you may even set a strict budget for what you’ll need to spend on gifts, but what you can’t neglect to factor in is all the other expenses that†tend to sneak by under the radar, masquerading as necessities.
Here are a few expenses you’re likely to overlook, plus a few surefire tips for keeping your finances closer in check this season.
Food, Drinks and Decor
Thanksgiving in particular is all about the food. But other holidays coming up are just as food-heavy. The national average for the cost of a 10 person Thanksgiving dinner is around $50, but I would wager you spend well north of that figure. This figure doesn’t include all the other expenses associated with providing a meal for family.
You know that home improvement project you’ve been itching to complete? There seems to be no better time than when you are expecting 40 people over for dinner. Tack on $200 for the house project. Then there’s the decor. Have you ever been to a Thanksgiving dinner without at least one pumpkin scented candle? I’d also wager you haven’t been to a dinner without themed napkins and table decor. Add on another $50 for decorations.
Oh, and don’t forget about booze! Very few people can survive a large family dinner without a glass of wine. Expect to spend around $50 on alcohol (double this amount if you plan on hosting a New Year’s Eve party!). A “simple” meal for family and friends could end up costing you somewhere around $350.
Don’t be caught off guard by holiday travel expenses. If you have family out of town that you will be visiting, budget for the trip in advance. How much will you spend in gas? How much will the flight cost? Will you be staying in a hotel or with family? How many meals will you need to eat out? Even if you are only traveling an hour away, your gas expenses will be more than normal.
Same goes for hosting family from out of town. Feeding extra guests for multiple meals really adds up. You also need to include the cost of extra activities. When family is together for a few days, it’s likely you’ll spend more on entertainment than normal. Going to a movie, visiting a museum, going ice skating these are just a few seasonal activities you may do with family, all at a cost.
Then there is the shopping itself. Yeah, I know you’ve already budgeted for gifts, but have you also budgeted for the other items you will pick up during your trips to the store? Very few people have the self control to only purchase the items on their list. Especially when sales are involved. You suddenly remember that you “need” new towels. Oh, and how can you pass up such a good deal on jeans? This is why people tend to completely regret their financial situation†come January. When the nostalgic music stops playing, and family has packed up and gone home, you’re left with a depleted bank account, or worse, major credit card debt.
To prevent this from happening to you, create an all-inclusive holiday budget. Sit down and take a good hard look at your calendar of events. What will you be spending for each event and holiday gathering coming up? Include the cost of gifts, decorations, food, drinks, entertainment, traveling and other general hosting expenses. Setting a budget prior to the event, when your head is clear, is your best bet for making the most of your money. Once your budget is set, break it down per holiday.
Smaller goals are easier to accomplish than larger ones, so breaking down your budget by event or even by week will help limit the padding that naturally happens when you create a budget on the fly. This way, you know you have $75 to spend on food for one event, $100 to spend on decorations for another event, and $150 to spend on that shopping trip with your mom.
Your financial life isn’t something you can just neglect for six weeks every year. Even though there is a lot going on during this season, you have to continue to prioritize your financial life. Don’t start out the new year hating your financial life. Prevent financial meltdown by setting a budget and knowing your limits.
Peter Dunn, aka Pete the Planner, is an award-winning financial mind who has authored five books, hosts the popular Pete the Planner radio show and travels around the country offering financial education. His signature wit will have you laughing as you learn. For more from Peter, visit www.petetheplanner.com.