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’Tis the season for (over)spending?
How to keep your finances in shape this holiday season
Are your finances ready for this holiday season? If you’re an average American, you will spend $967 this holiday season, according to the National Retail Federation. And, unfortunately, most people haven’t saved a penny for gifts. Depending on the current state of your financial planning, this could set you up for a holiday debt hangover.
Even if you’re just now realizing that the holidays and all of the expenses that come with it are just around the corner, it’s not too late to protect yourself from some scary credit card bills come January.
Here are a few tips to ensure you start out the New Year right:
Create a holiday spending plan – now
This doesn’t have to be a buzzkill; the bill in January, that’s a buzzkill. Take an honest look at your finances and determine how much you can spend on gifts and decorations this year. Depending on what that number is, you may have the opportunity to get creative in your gifts this year.
Spend cash whenever possible to help you keep track of how much of that budget you’ve spent and to really feel how much the purchase costs.
If you want more room to play in that spending plan, you may want to consider taking a second job or working overtime over the holidays. Toy and game stores increase their staffs by as much as 38% around the holidays, and there are more co-workers looking for someone to cover a shift or project for them.
Now is the time to put those credit card points to work, helping to expense your travel or even give you cash back. After all, that bonus was why you signed up anyways, right?
If you are so blessed as to receive a holiday bonus, set aside a percentage to help you cover the extra costs – or an extra little something for yourself – and then invest the rest to help you reach those financial goals faster.
Avoid the “little indulgences”
Don’t give into the indulge-a-little mindset that is so easy to fall into this time of year. So often we waste money in areas that don’t give us as much enjoyment as we initially think. The extra latte here or extra sweater there, all in the spur of the moment, does add up. Keep both the extra pounds and the extra bills at bay by reminding yourself of your goals.
You’ll be thanking yourself that you don’t have to work extra hard in the New Year to make up for those things that didn’t even bring you much satisfaction now. In fact, if your budget is tight, see what you can cut from your usual expenses to help cover the extra holiday costs.
Embrace emotional equality
It is so easy to get caught up in the trap of “keeping up with the Joneses” and spending more than we should on extravagant gifts or having the best-decorated house on the block. Take a few minutes – or even a few days – before you buy to check-in with yourself and make sure that your fulfillment levels on a purchase match the price you are paying for it.
Give, and receive, with a generous spirit
This does not mean you should out-buy everyone in your life. In fact, if exorbitant purchases lead to a begrudging attitude toward your friends and family once the bill comes, it will only harm your relationship.
If there is someone in your life who always gives you extravagant gifts, accept them in the spirit of generosity in which they were given, but don’t feel an obligation to reciprocate with a gift of equal value. It’s better to give a thoughtful gift within your means, and seek to bless them, than to have a relationship in which you keep score. Perhaps that person would even prefer the gift of an experience with you instead. If you are really set on getting someone on your list a gift outside your means because you know how much they’ll love it, see if there are one or two other people who would want to go in on the gift with you.
Finally, you may want to cut down on your list. Do you really need to get Bob in accounting a present? Maybe Bob would enjoy your grandma’s secret-recipe Christmas cookies or homemade sugar scrub instead of the fifteenth bobblehead for his desk.
Plan ahead for next year
Make the most of the pain you’re feeling now over your lack of planning and start planning ahead for next year. Earmark a small amount in your spending plan each month for next year’s holidays, and by the time you get there, you’ll have a cache waiting for you.
You could also work off the list you just created for this year’s gifts and start looking for gifts for those on your list throughout the year. Having half your list taken care of before Black Friday rolls around next year will minimize financial strain and last minute gift-finding stress. Just make sure you keep track of your list and remember where you hid the gifts!
Lastly, take advantage of the after-Christmas sales to stock up on wrapping paper, decorations and Christmas cards for next year when they are at their deepest discounts.