CHICAGO, Nov. 8, 2012 /PRNewswire/ -- As part of BMO Harris Bank's ongoing commitment to financial literacy and Helping Make Money Make Sense, BMO Harris is providing weekly financial tips. This week's tip gives you advice on how to create a holiday budget.
From the North Pole to the Midwest, this time of year, everyone is making lists – and yours should focus on your holiday expenses. Setting a budget helps you prepare for these extra costs and knowing what to expect can help give you peace of mind.
Unfortunately, many people make the mistake of not planning ahead. This often leads to overspending and paying off a hefty credit card bill throughout the next year. However, a bit of advance preparation and budgeting can help you avoid these situations.
BMO Harris Bank recommends including the following in your holiday budget:
- All gifts – big and small – Include anyone you may need to purchase a gift for, such as your spouse, children, parents, best friend, boss, babysitter, etc. Making a list helps you avoid forgetting anyone as well as decide how much to spend on each person. This way you won't end up spending $100 on one of your kids and only $50 on the other ones. Also, remember to set aside a small amount for wrapping paper, ribbon, gift tags and other trimmings.
- Cards and postage – Whether you buy boxes of cards at a discount store, print them off on your home computer or use photo cards from a photography studio, you need to account for the expense. Don't forget to include postage – depending on how many cards you send each season, this could end up being a significant expense.
- Decorations – Decking your halls for the holidays can add up. Trees, wreaths, garland, ornaments and yard decorations should all be included in this section of your budget.
- Entertaining – If you're hosting a formal dinner party, casual open house or intimate family gathering, chances are you'll encounter expenses such as food, beverages, invitations and favors. Make sure all of these are included in your budget so the only thing unexpected is an extra guest or two.
- Travel – Airfare, lodging, car rentals, dining out and tips need to be included within your travel budget. Even if you are only driving to your sister's house a few hours away, make sure you account for gas expenses. With today's prices, even a simple day trip can add up quickly.