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Holiday Budgeting 101

It’s easy to get caught up in the magic of holiday spending. But if you’re relying on credit to make holiday wishes a reality, the magic often falls flat when your bills come due. Take the time now to create a holiday budget and avoid a post-holiday spending hangover.

Be Realistic

The best thing you can do to curb your holiday spending is to set a realistic but firm budget.
Most people spend around $1,000 on holiday merriment, according to the National Retail Federation. This amount includes gifts and holiday items, as well as spending on non-gift purchases, like family photos or special outfits for parties.

But planning to celebrate the holidays and being able to afford them are two different things. A U.S. News & World Report survey says an estimated 4 in 10 people plan to go into debt to finance gifts and travel.

To create a holiday budget, start by looking at what you spent last year. Consider the impact that spending had on your budget—for instance, were you paying off credit card bills for months after the holidays? Did you have to skip the family summer vacation because Christmas was too expensive?

Be honest about the trade-offs that you’re making with your current holiday spending. That will strengthen your resolve to stick with a budget this year.

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