In 2013, the average household spent $735 on the holiday season. And it’s no wonder; between buying gifts, visiting in-laws, and decking the halls, spending during the holidays can add up fast. But going into the season with a plan can help keep spending under control. Here are some tips to help you create a budget that you can stick to while still enjoying the magic of the season:

Take stock of savings. The best way to prepare for holiday spending is with a savings account that you contribute to all year. If your savings are coming up short, you may want to look into skip-a-payment options which may be offered on loans. Many lenders offer this option to give you the ability to have more spending power for a small fee, especially during the holidays.

Figure out your limit.  Your next step in creating a budget is to determine how much money you have available to spend. After considering savings, look at recent spending and any upcoming seasonal expenses (like car insurance premiums) to determine a baseline for normal non-holiday expenses that will need to be covered. Finally, add your income and savings together, then subtract these non-holiday expenses to determine what a manageable spending limit is for you.

Look at last year. Once you have figured out your spending limit, it is a good time to compare that number to how much you spent on the holidays the previous year. While we always strive to do better, looking at past spending can be a good baseline for making decisions for this year. If you didn’t keep track of purchases last year, you can often use online banking to look at statements from that period and figure out where your money went during the holidays.

Determine if cuts are needed. After looking at last year’s spending, you may notice that it is higher than what you determined to be your spending limit. While we would like to be able to spread the joy to everyone during the holidays, you also don’t want to be paying for this year’s “hot toy” well into next year, or longer, because you had to use credit for a large portion of your spending.  Look for areas where spending can be reduced if your spending looks like it will surpass your ability to pay.

Utilize your tools and resources. There are several free options available that will help you keep track of your spending. Prepaid debit cards offer flexibility, convenience, and protection for shopping, particularly during holiday time. Pre-paid cards make it easy to employ “envelope” system of budgeting — in which a set amount of cash is divided between envelopes for budgetary needs. Be sure to look for a free card that has no activation, monthly or purchase fees and a zero-liability policy.   

Be sure to keep track of even the little things—like cards, wrapping paper, gift certificates—which can add up quickly and can easily be forgotten. Here’s a free holiday worksheet to track your spending and stay on budget. Then, keep your worksheet around to help make your budgeting even easier next year. If you prefer to print out the worksheet, you can use your scanner, or smartphone or tablet camera, to make a digital copy to refer back to next year.

Budgeting Guide