If you want to avoid spiraling out of financial control due to the holiday spending frenzy, the best thing you can do to keep control is to start with a budget.

Creating a budget will give you more control over how much you spend by helping you strategize the best way to distribute your money. The budget structure of your monthly income should be divided into three categories; needs, wants, and savings.

You should portion your monthly income into each category at the following percentages: 50% towards needs, 30% towards wants, and 20% towards savings. 

Establishing a reasonable budget that reflects your monthly payments limits how much you spend as well as how much you want to save. A budget allows you to set expectations for yourself when it comes to spending wisely, as well as saving for future purchases and your emergency fund. \

Let’s dive into how to avoid overspending by limiting your spending, balancing your budget, and saving money. 

Limitations of Spending 

Think about your monthly payments that need to be made, whether it’s for a loan or a credit card, so you can set a limit on your holiday spending and day-to-day expenses from what you have left from your monthly income. Once you have that limit set, it’s important to keep track of all your purchases so you can keep your budget balanced and avoid overspending. 

Balance Your Budget 

Because your monthly spending can increase due to the holidays, you can adjust your budget a little while keeping it balanced. Simply change your income allocations from 50/30/20 (needs/wants/savings mentioned above) to something like 50/40/10, 50% needs, 40% wants, and 10% savings.

Slightly adjusting your breakdown can keep your budget balanced by ensuring you’re still covering bills and purchases, without completely neglecting an important category like savings. 

Save Up for Back Up 

Saving money through a budget can be rewarding and provides financial security. But savings only works when you stick with it. The purpose of saving is to make sure you have funds available for future expenses. That could be an emergency fund so you have money set aside to cover an emergency, or it could be a separate savings account for a big vacation or purchase, like a house. Putting a portion of your monthly income into a savings account is critical to staying on financial track throughout the year and helps you reach your long-term goals.  

This is a busy and hectic time of year, making it particularly difficult to avoid spending more than planned on gifts, travel, and other holiday expenses. Making sure you set up a proper budget with set allocations gives you control over your money and keeps you from spending way too much during seasons of spending, like the holidays.