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6 expert tips to help you create a holiday budget you can live with

Select spoke with financial experts for their best budget-building advice so you don't overspend this season.

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They say the holidays are the most wonderful time of the year. Although your heart may feel this way, your bank account might not feel as much joy. Planning a holiday spending budget can be an overwhelming feat to conquer, but there are realistic strategies you can follow to keep a handle on holiday spending and still enjoy the season.  

Select spoke with money experts for their best advice on how to stay on track with your holiday spending while also embracing seasonal cheer.

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1. Keep your spending budget clear and concise 

Don't overcomplicate a budget with too many restrictions and requirements. If the budget looks too daunting or cumbersome, you'll be less likely to want to stick to it. 

"Put a practical budget in place and keep it simple so you can easily stay on top of your finances and increase your odds of success," recommends Brian Walsh, senior manager and CFP at SoFi. 

Your budget may include a tally on what you want to spend per person on gifts, a list of travel expenses or groceries if you're hosting, and the amount you've earmarked to spend on festive clothes and accessories.  Once you have these numbers written down, you should be in a better mindset to keep track of your spending. 

"Make a list of your anticipated expenses and assign a dollar amount to each. If you're able, get granular with your list, including what gifts you plan to buy and for whom," advises Mary Droesch, head of consumer and small business products at Bank of America. Outlining specifics will help you avoid the budget creep that comes from wandering aisles or retail sites, she explains.

2. Trim travel expenses by road tripping

Consider driving to your destination rather than purchasing expensive airfare or renting a vehicle for your holiday travels. Driving can allow you to put that savings toward other holiday goals. 

"This holiday season, many are looking forward to reuniting with loved ones, but travel costs can get pricey when you add in rental car fees (not to mention the shortage of rental vehicles), strained flight availability and unpredictable weather," says Jason McDonell, executive vice president, merchandising, marketing and eCommerce at Advance Auto Parts.

Creating a travel plan, stocking up on road trip essentials (like jumper cables and a first aid kit) and, of course, making sure your vehicle is in good shape, are the keys to any successful road trip that can help you save time and money, McDonell says.

3. Find a budget buddy

A budget buddy can keep you accountable, says Walsh, and may even help reduce FOMO spending. 

"Your budget buddy can be anyone from a financial professional to a family member," he says. During the holidays, this support and encouragement can help you make sound financial decisions and keep you on track with spending. So when your heartstrings are pulling you to pricey or extravagant purchases, turn to your budget buddy for a financial reality check. 

"Having a budget buddy for shorter-term goals can also help build healthy financial habits that can lead you to tackle larger obstacles down the road," Walsh says.

4. Assess last year's holiday spending

Are you still carrying debt from last year's holiday buying frenzy? Was that escalated spending truly needed?  

"To determine my budget for the holiday, I personally like to take an inventory of what happened the year before and allow that to help me build the budget for this year," shares Tania C. Foster, founder and financial advisor at TF Wealth Advisors in Columbia, SC. Beyond debt considerations, think back and decide if all that spending was worth it. Ask yourself if your children enjoyed all of their gifts last year or were there any "one and done" gifts, says Forster.

"A couple years ago my youngest son had more fun playing with the boxes the gifts were wrapped in than he did with the actual gifts," she says. "It's important to try to be frugal and remember that we most likely buy gifts throughout the year and the holidays are for celebration of life and family, especially this year."

5. Understand buy now, pay later terms

If you plan to use a buy now, pay later offer to purchase something, have a clear understanding of the terms first, says Colleen McCreary, chief people officer at Credit Karma. "It's easier than ever to purchase an item — and finance it — without even thinking about the implications of the purchase," says McCreary. "It's this disconnect between making a purchase and actually paying for it where consumers can get in trouble." 

Be sure to know the terms of this arrangement. "It's yet another bill consumers have to remember to pay — for some it comes down to forgetting to make the payment versus not actually having the funds," she continues.  It can be a good option, McCreary says, just be sure to have a plan in place to pay it back in full and on time.

6. Keep track of your spending

An effective tool for money management during the holidays isn't in your wallet; it's on your cell phone. "Mobile banking apps make it so easy to keep track of where you're putting your money," says Sonali Divilek, head of digital channels and products at Chase. 

For example, Chase's Snapshot feature makes it super easy for users to keep track of their card usage, what categories they are spending the most in, says Divilek. Also, be sure to set up notifications and alerts, as financial apps keep you updated about any suspected fraud on your account and keep you updated about potential data breaches.

There are also a number of free budgeting apps like Mint and Personal Capital, which syncs all your various financial accounts into one place. These easy-to-use apps can help you track spending, create a plan for savings, and get a grasp on both your short-term and long-term budget goals. 

You can also set up alerts and take advantage of credit-monitoring features to make sure you're managing your finances during this busy time of year.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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