Parties, get-togethers, exchanging gifts…the spirit of the holidays is with us once more. For many, they’re already in full swing. If you’ve been following us over the past year, you’ve built up some good strategic budgeting and spending knowledge.

Yet, the holidays can be quite a beast to tame, especially when you already need to factor in your everyday spending. In other words, planning your holiday budget can vastly differ from spending during the season.

With this in mind, it’s helpful to be aware of the “holiday hangover.” It’s the feeling of regret when someone realizes they spent too much during the end-of-year festivities. When daily life resumes in January, the credit card bills—and reality—set in.

This week, let’s anticipate how the holidays might affect your spending this month. We’ll review a few strategies to “soften the blow” of holiday overspending. By following these tips, you should be able to start the New Year with a grounded outlook on your finances.

Let’s start with why people overspend during this time of year.

Why Overspending Happens During the Holidays

There are many reasons why the holiday hangover is a real (and recurring) event in people’s lives. Among them include:

• The Fear of Missing Out: The holidays come only once a year. People want to leave a lasting impression on friends and family to make this season the one to remember.

   

• A Sense of Obligation: People have reasons for joining the festivities. This includes doing one’s part to ensure the holidays go as planned for the satisfaction of their peers.

   

• Form of Expression: The holiday season is a time of great joy and celebration for many. It’s understandable to want to live this time of year to the fullest.

   

• Everything’s Just More Expensive: Things are getting a little pricier. You aren’t hallucinating: the cost of living is rising, and the holidays tend to reinforce that.
  

On the other hand, it’s easy to get wrapped up in the spirit of the season. While this time of the year is defined mainly by celebrations, it is also a time of reflection.

Events in your life and around you might have influenced your relationship with money and how to use it. As such, your view on the holidays might also affect how you spend.

As long as you keep your goals in mind, you can spend during the holidays with confidence. It just takes a little planning and mindfulness. Here are our recommendations.

1) Work With What You Already Have

The old philosophy for the season says, “It is better to give than to receive.” Your established budget may already have some cash you can leverage for the festivities.

One of the strategies for forming a budget is categorizing your spending. This often involves separating your expenses between “needs” and “wants.”

Although your living expenses might not be all that negotiable, you can find some room if you have a portion of your budget already set for discretionary spending, also known as “luxuries.”

Before taking out any loans or reaching for the plastic, see if you have some money you have previously defined for takeout or other pastimes. This is money you can use for the holidays instead.

Think about it as loud budgeting but for yourself. For example, let’s say you love going to restaurants. Re-frame this passion to involve your loved ones, thinking, “I love going out to eat, but my family is rarely in town. I’ll use this part of my budget for them rather than myself.”

You’d be surprised at how re-framing your perspectives on spending can help overcome some hesitation.

Additionally, now is a good time to tap into any sinking funds you may have contributed to over the year. You’ve saved purposefully, and now the purpose has arrived! 

2) Get a Little Leaner on Your Grocery Budget

On top of re-purposing portions of your budget, you can also get a little more granular with how you spend this month to score extra savings for the holidays.

Of course, if you’re already re-purposing your discretionary budget for the holidays, where else can you cap spending? The answer is in your groceries.

While many people might think of food spending as a living expense, the reality is that groceries are a wide-ranging category that, in essence, includes luxuries you can do without.

Think of the “extras” you toss in your shopping cart that you can probably do without this month and a few weeks later. They might include:

• Junk food
• Prepared and frozen meals
• Beer, wine, and spirits
• Home goods that might be cheaper elsewhere
  

After evaluating the luxuries in your grocery list, do away with them and only get the necessities.

You can also stack the savings further by doing a pantry challenge. This is when you prepare meals with only the ingredients you currently have at home.

If you have a bunch of dry or canned goods, now’s the time to use them. And only once everything’s exhausted do you go out grocery shopping. It may be a good way to get a little creative with your recipes while saving extra money for the holiday trips you’ll be taking this month.

There are other ways to mitigate the costs of overspending during the holidays. However, we wanted to cover a few strategies you can use now.

When the New Year arrives, you can consider other options, like doing balance transfers on a lower-interest credit card or resolving to be more honest with your budgeting and debt management.

For now, we recommend doing the best where you can with the people you care about the most.

Count on First Florida to help you keep your finances on track for the holidays and daily life. If you’re planning for next year, we recommend opening a Holiday Club savings account, which you can use to prepare for next year’s festivities.