Christmas is a little less than seven weeks away. But planning now for the holiday season will ensure that your Christmas spending doesn’t send you to the poor house. Take these simple steps to prevent the holidays from derailing your finances.
Create a budget
Your budget will become the bedrock upon which rests your holiday spending. Sit down with your spouse to decide ahead of time how much you can comfortably afford to spend for Christmas. Break down how much you’ll spend for travel, Christmas tree and decorations, holiday meals and gifts.
Make a list and check it twice
You’ve decided how much to spend on gifts. Now, you’ll need to make a list of the people you’ll be buying gifts for, and most importantly, assign a specific dollar amount to each person. Make sure to consider relatives, friends and co-workers.
At this stage, you may have to cultivate your inner Scrooge. To keep within your budget, some people may have to be chopped off your list. However, discipline here will save you financial pain when credit card bills are due in January.
Remember, you don’t always have to spend lots of money to provide meaningful gifts for everyone on your list. The thought and effort is what counts the most. A fresh baked batch of cookies presented in a decorative container could bring more smiles to someone’s face than any store bought gift.
For inspiration, consider websites like Pinterest, where you’ll find tons of ideas for homemade gifts that anyone would love to receive.
Set aside money each week for your Christmas spending
You want to avoid debt at all cost. Once you decide how much money you can afford to spend for the holidays, start setting aside money every week. If you plan on spending $700 for the holidays and have seven weeks left until Christmas, place $100 a week into a Christmas fund to cover your holiday spending.
Look for ways you can cut your discretionary spending to help fund your weekly Christmas fund contributions. Eat out less, watch Netflix instead of going to the movies or skip your daily latte. Consider using the opportunity to cut your cable bill, slash your phone data usage or look for a better deal on your car insurance. Such moves could pay dividends well past the Christmas season.
Manage expectations
Your kids are the most important thing in your life, but that doesn’t mean you have to buy them everything under the sun. Manage their expectations early. Make it clear, for example, that they’ll receive only one major gift, along with several smaller gifts. Let them prioritize what they truly desire for Christmas.
The holidays should be one of the most wonderful times of the year. Don’t let the commercialization of the season ruin your holiday joy. Create a Christmas budget and stick to it. This will be the best Christmas gift you’ll ever give yourself.
BMWK, how do you control costs during the holiday season?