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Tips For Reigning in the Holidays
By JLP | November 7, 2006
In less than two months, a lot of people will be waking up with a budget hangover especially once the credit card statements start rolling in and they see just how much they spent on the holidays. Unfortunately, the time to plan financially for this year’s holiday season was LAST YEAR! Regardless, there are things you can do limit the damage that the holiday season can do your budget. These are my ideas. If you have any that you would like to add, please do so by leaving a comment.
Here’s some tips I have:
1. Sit down and create a holiday budget. The budget will consist of three major areas:
- Gifts - make a list of everyone that you will be buying gifts for along with the price range of what you want to spend on the gift. Be sure to include shipping charges if your gift requires shipment. Also, be sure to include gifts to charities that you support. Make the list as complete as possible so that it represents your reality.
- Food - I think holiday food is overlooked as a major expense during the holiday season. So while you are making out your gift list, make out a menu for the holidays. Be sure and include those items you may take to parties or other social events. Also, be sure and include alcoholic beverages like wine and beer in your list. Most likely you will experience overlap with the gifts category so you will want to make sure you aren’t counting something twice. For food items that are gifts, you might want to list it in food but include the dollar amount in the gifts category along with a notation so that you know how much you spent.
- Decorations & Entertaining - This is another category that can easily blow the budget. Make a list of all the stuff you need and then decide what you want to buy now and what you can buy AFTER the holidays (hopefully on clearance).
- Miscellaneous - I know this is a broad category but anything you spend that doesn’t fall in the gifts or food category will fall in the miscellaneous category. Keep a list of everything you spend that can’t be categorized so that you will have a basis to go on for next year’s planning.
2. Add up the totals from your budget and decide how you are going to pay for it. Think LONG AND HARD before you charge anything on a credit card because IF you charge up a bunch of stuff that you won’t be able to pay for before your grace period is up, you will have to pay interest. Interest hurts you becuase it is expensive and has to come out of your budget somewhere, which can create a vicious cycle. If you don’t think you can afford to pay off this year’s holiday bill in a timely matter, then go back through your budget and cut out anything you don’t have to have.
This part is not fun, but is TOTALLY NECESSARY!
3. Don’t go crazy buying stuff for your kids or grandkids. It is absolutely crazy how much people spend on their kids during the holiday season. And, sadly MOST of the stuff that is bought ends up in the back of the closet by January 1st. Besides, other than a significant gift, what kid will remember all the junk they received over the years? What they remember are the memories, not the stuff. I promise!
4. After it is all said and done, sit down and take a look at what you spent and where you spent it. Then, if you are comfortable with the numbers, use this as the basis for next year’s budget and include it as a line-item in your family budget. In my opinion, your goal should be to get out of vicious cycle of paying off last year’s holiday season and instead plan ahead for next year’s holiday season. So, if you figure out you spent $1,200 this year, then you can figure that you need to save $100 per month in order to meet your holiday budget for next year. And, you can put this money in an interest-bearing savings account. The advantage in doing it this way is that instead of PAYING INTEREST to a credit card company, you can EARN INTEREST on your holiday savings account. Sounds good doesn’t it?
There you have it. Those are my pointers. Hopefully having a budget for the holiday season will take away at one source of holiday stress.
Topics: Budgeting |