Many people start thinking about their holiday plans -- and their budget for those plans -- around October or November, just a month or two before they need to start traveling and buying gifts. However, planning and budgeting for a holiday should begin way early so that you can enjoy the holiday. There are number of factors that you need to put into consideration.
First off, add the holiday savings as an expenditure line in your budget. Calculate how much you expect to spend on all holiday expenses -- from gifts to travel to meeting friends for dinner and drinks -- and divide that amount by 12 to figure out your monthly savings goal. While you're calculating your total holiday budget, consider both the obvious things (airfare, fuel, accommodation) as well as the incidentals, such as meals, pet care and luggage fees. Review last years' receipts or bank statements for an overview.
Starting now, add a new line to your budget for "holiday savings" and set money aside each month for that purpose alone. Calculate your total holiday expenses, and then divide by 2 or 3, depending on how many months remain until you get hit with the bills. Come next year, you'll have a full 12 months to master this strategy, and you'll be able to nonchalantly pat yourself on the back (along with those people who get their Christmas shopping done by July.)
However, sometimes the savings plan that we put in place may not work out as desired. In that case, you can try to be frugal with your expenditure and cutting back on things that you don’t currently need. You could also find a new source of income to supplement your overall income.
If you're on the ball, you should already have other savings-related lines on your budget -- such as money you're setting aside for emergency savings, your family vacation, future car-related expenses, etc.
Keep your holiday money separate from these savings so you don't accidentally dip into it before the holidays come. Open up a new savings account earmarked for the holidays so you're not tempted to touch the amount that you've saved. You can also clearly track your progress.
To ensure you abide by the savings plan and have some discipline, you can set up automated transfer from your current account direct to the holiday savings account. By sending the money directly to savings, you prevent yourself from spending it on other things.
To make sure you stick to the budget you set for yourself -- and maybe even have a little of that money left over for next year -- don't forget to try to find ways to reduce your overall travel costs when it's time to start planning your trip(s).
Consider booking a flight for non-peak days (for instance, try to avoid Christmas Eve or the day right before Thanksgiving). If you're traveling a short distance, consider driving or taking a train. Look for "rideshares" or carpools, in which you can split the fuel costs.
Use travel comparison sites to locate the best deals for your destination. Compare non-stop flights to flights with one layover if you don't mind killing a little time in an airport (it can save you anywhere from 20 - 60 percent). Take advantage of membership and rewards programs you belong to (or could join) to earn things like frequent flyer miles or travel discounts.
With this simple strategy, you can finally enjoy the holidays the way you're supposed to -- by spending time with friends and loved ones rather than spending time stressing over how you're going to cover the costs.
This article has been adapted from huffpost.com and is copyrighted to Paula Pant, WiserAdvisor.com