Every year, you might find that money is tight during the holidays. Keeping decent savings for emergencies and gifting or leisure might seem like a daunting task, but there are tried and true ways to ensure that you’ll be able to afford gifts this season.
Budgeting for the Holidays
Budgeting, at its core, is simple math and planning. Even when money is tight, there are many budgeting tips to help keep you on track financially, even during the holiday season.
The 50-30-20 Rule
First, figure out your income after taxes. If you pay taxes throughout the year, that’s great. You will likely be eligible for a refund during tax season. If you don’t, make sure you’re setting aside money frequently, so you don’t face financial strain later.
Once you know your income, a great practice is the 50 30 20 rule. Start by writing down all of your expenses, organized in categories of needs versus wants. The Needs will be payments towards rent, utilities, internet/cable, travel (parking, gas, car payments, train fare, etc.), groceries, insurance. Your needs should equal 50 percent or less of your income. If over 50 percent, consider places you can cut back. Be mindful about where you shop for groceries and what you buy. Junk food is expensive. Contact your loan servicer to discuss loan payment reduction opportunities.
Needs Versus Wants
Anything else is a want, and this can account for as much as 30 percent of your income. A budgeting tip to always keep in mind is: how can you reduce spending in this category? Can you get rid of subscriptions, cut spending on coffee and restaurants, or alter your lifestyle to benefit your bank account?
The last 20 percent (or more) should be saved. If you [...]