It's Time to Start Budgeting for This $1,000 Expense

by Christy Bieber | Published on Oct. 14, 2021

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A man looks at bills beside a stack of presents.

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Don't get caught off guard.

According to a Gallup survey, average spending on holiday gifts comes in at close to $1,000. This is a huge sum of money, and if you spend close to the average amount, you could easily find yourself reaching for the credit cards to cover your costs.

Rather than getting stuck with holiday debt that could follow you into the new year and beyond, why not take a different approach this year?

Start budgeting now so you're ready for the holiday season

Although the holiday season comes every year, far too many people don't plan ahead for it and instead end up reaching the festive season without any extra money in the bank earmarked for gifts.

With a few months left until the holidays, though, this year you don't have to let these expenses creep up on you. You can figure out how much you want to spend on gifts for loved ones right now. Then, you can begin putting some money aside each month so you are ready when the time comes to hit the mall and start buying presents.

If you'll spend around what the average American does and need $1,000 by the end of December, for example, you could set aside around $335 in October, November, and December. You can rework your current month's budget to free up this cash now. While it may require some sacrifices, it will be a lot easier to save $335 a month over a few months than it would be to come up with $1,000 all at once when the holidays roll around.

To plan and prepare for the holidays, start by deciding what your budget will be. You can make a list of who you need to purchase gifts for and how much you plan to spend on each person, and then get a good idea of what your total expenditures are likely to come in at. It's a good idea to leave yourself a little wiggle room too since unexpected expenses are sure to creep up if, for example, you forget someone on your list.

Set the money aside in a high-yield savings account until you are ready for it. This can help you avoid the stress of struggling to figure out where your holiday budget will come from. Some stores also allow you to do layaway, which means you come in and pay a little bit over time for an item and are able to take it home once it has been paid off in full. That's another option if you have a specific, expensive gift in mind.

Whatever approach you choose, the sooner you get started, the more time you have to build up your holiday nest egg over time. If you begin working towards building your gift budget now, you'll be able to enjoy shopping for holiday presents this festive season without having to spend time worrying about where the cash will come from or how long it's going to take you to repay the bills later.

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