The Shulhan Aruch (Orah Haim 296) rules that if a person can afford only one cup of wine for Shabbat, and he must choose between Friday night Kiddush, Shabbat morning Kiddush, and Habdala, then he should use the wine for Habdala and recite Kiddush over bread. If a person finds himself in this situation on Shabbat Hanukah, and he must choose between a cup of wine and candles for the Hanukah lighting, he should use his money for Hanukah candles. Despite the fact that Habdala is required on the level of Torah obligation and Hanukah candles are required by force of Rabbinic enactment, nevertheless, Hanukah candles take precedence due to the particular importance of "Pirsumeh Nisa" (publicizing the miracle).
The Shulhan Aruch writes that Habdala should be recited while sitting, and those listening to the Habdala should likewise sit. Ashekanazim, however, have the practice of standing during Habdala, and the Ben Ish Hai (Rav Yosef Haim of Baghdad, 1833-1909) writes that this was also the practice among the Jews of Baghdad. Everyone should follow their family’s practice in this regard. In our community, the generally accepted custom is for everyone to sit during the Habdala, except that in the synagogue, the Hazan stands while he recites Habdala out of respect for the congregation.
The Shulhan Aruch writes that while reciting Habdala, one should hold the cup of wine in his right hand and the Hadasim in his left hand. After reciting the Beracha of "Boreh Peri Ha’gefen" over the wine, one should switch the cup and the Hadasim, and hold the cup in his left hand and the Hadasim in his right. He should then recite the Beracha of "Besamim" and smell the Hadasim. At this point, the Kaf Ha’haim (Rav Yaakov Haim Sofer, Baghdad-Israel, 1870-1939) writes, one should place the Hadasim on the table and then place his right hand near the flame for the Beracha of "Ha’esh." He should then move the cup back to his right hand and recite the concluding Beracha of Habdala.
After completing Habdala, one should drink the required amount of wine. It is then customary to place the Hadasim in one’s garment. The Ben Ish Hai writes that one should keep them there until Friday, when they should then be placed into the oven to feed the flame while the Hallot are baked. Additionally, the Ben Ish Hai writes that it is preferable to use three Hadasim for Habdala, and to tie them together. When one smells the Hadasim, he should have in mind that the extra soul which he received over Shabbat should leave an impact upon his soul throughout the week. One who does not have Hadasim should use rosewater or some other fragrant spices for "Besamim."
The Shulhan Aruch writes that one who wishes can have in mind not to fulfill the Habdala obligation through the recitation of Habdala in the synagogue, and instead recite Habdala at home.
When Yom Tob falls on Mosa’eh Shabbat, Habdala is combined with the Kiddush for Yom Tob. The Shulhan Aruch cites a debate among the Halachic authorities as to whether one who does not have wine in such a case may recite the combination Kiddush-Habdala over bread. Some authorities maintain that since one is reciting Kiddush, which can be recited over bread, the combination Kiddush-Habdala may likewise be recited over bread. Others, however, disagree, and maintain the since Habdala may not be recited over bread, in this case, too, one cannot use bread, and should instead recite the Kiddush-Habdala over a different beverage, like beer. The Shulhan Aruch seems to side with this second opinion, and this is the Halacha.
