Holiday Happiness or Financial Hangover? Finding the Right Balance

Striking a balance between holiday cheer and finances seems to be elusive. No matter how hard you try to stick to your budget, overspending during the holiday season is ineluctable. While painting the town red, people often get carried away and end up spending more than their budgets allow, and when the holiday season ends, they find out the high level of debt they have accumulated.

It is very common to experience financial distress after the holiday season, but this boils down to a lack of planning. When you know how much money you have to spend on celebrations, vacations, get-togethers, and presents, you will naturally be able to forestall overspending. However, not everyone is weak at budgeting. During the holiday season, they spend more than their budgets allow because of a festive spirit.

But if you do not want to spend sleepless nights after the celebration is over, you should try to manage the balance between holiday spirit and your finances.

Ways to strike a balance between holiday spending and financial hangover

Here are some of the ways how you can establish the right balance between holiday and financial distress:

• Assess your finances

If you are looking to create a holiday budget, first off, you need to assess your financial condition. You cannot just choose a random number to spend on Christmas celebration and vacation. You will have to analyse your budget. First, you need to take into account the scope of essential expenses and savings for a rainy day.

Grab a bank statement of the previous six months to estimate how much money you need to pay for living expenses. Once you have set this amount of money aside, you will come to know how much you are left with. Do not compromise on your savings plan, however. Discretionary expenses are allowed once in a while, but they must be halted, as they will enable you to have a bigger budget for fun. This will even help you avoid taking out a quick loan in Ireland to pay for holidays.

• Create a detailed budget

Once you know how much money you have in the aggregate to spend during the holiday season, the next step is to allocate money to each category, such as decoration, dinner, vacation, entertainment, and shopping.

You should specifically assign a spending limit to each category. Make sure that you will remain specific. If you do not want to take on debt, you should spend more than the assigned limit. However, it is likely that you need to borrow a little money to bridge the gap in your savings. In that case, you can take out loans like Provident in Ireland. However, when taking out a loan, make sure that you will not struggle with payments.

• Start savings early

You know that at the end of the year, you will need money for the Christmas celebration, so you do not have to wait until November to start saving. A golden rule of thumb says that you should start stashing away money in mid-year. This will help you quickly grow your celebration budget. It is likely that the actual budget is slightly larger than the estimated budget, but the gap can be easily funded with a small loan.

Although you can rely on a loan to fund the gap in your savings, it is still recommended that you never go beyond your spending limit. You should try to reduce the size of the budget to avoid borrowing money. For instance, you do not have to buy expensive Christmas gifts for everyone. Figure out how you can fix things.

There is a lot more to avoid a financial hangover after the holiday season

Just creating a budget is not enough in order to ensure that you will not have to take on debt to pay for holiday expenses. There are loads of catalysts you need to tackle if you do not want to end up with accumulated debt.

• You should set realistic expectations. There is no such thing as a perfect holiday, so do not try to overdo things to impress everyone. Focus on connection and gratitude instead of price. Furthermore, do not forget that you will have to bear the consequences of overspending only to impress others.
• It is vital to enjoy Christmas to the fullest, but you should not compromise on your priorities. If you have some other obligations to meet, for instance, you have to tackle your existing debt, or someone in your family has medical bills, you should prioritise them. This will preclude you from borrowing money for such ongoing expenses.
• You might feel a bit guilty for not buying your close ones presents, but if your budget is not large enough, you should learn to say no. There is no point in keeping them happy by ruining your budget.

What if you have fallen into debt post-holiday?

Sometimes, you inadvertently fall into debt. There is nothing to panic about. You should rather try to figure out ways to tackle it. Here is what you can do:

• First off, you should determine how much you owe so that you can create your budget accordingly.
• If possible, you should transfer your credit card debt to a balance transfer card. If your credit rating is good, your lender will not have any problem with it.
• Stop shopping unless you have settled your debt in full.
• Use credit card points to pay off your credit card bills.
• Sell unwanted gift cards and return unwanted gifts you bought for yourself.
• Put your pay increase towards debt settlement.
• Get a side gig.

The final word

It may seem difficult to strike a balance between holiday happiness and financial hangover, but it is not impossible. A golden rule of thumb says that you should carefully create your budget and allocate a spending limit to each category. If you set a realistic sending limit and start saving money at the earliest, you will be less likely to feel the need for borrowing money.