When January rolls around, the gifts have all been opened, and the lights have been packed away in the attic, where will you find yourself? Will you be tired, but content because your family’s holiday experience was a wonderful time of making memories together, or will you be searching job sites for secondary employment because your lack of a holiday budget led to unbridled spending followed by a daunting stack of bills to pay?
The holiday season is meant to be a joyful experience, not something that crushes us with debts and obligations. Would you like to learn how you can transform your holiday spending and still have a memorable December? Try some of these tips from your local accounting professionals at Hayes and Associates. They will help you make the most of the holiday season without breaking the bank.
Prepare Your Holiday Budget Early
While the practice is less common today than it once was, local banks and credit unions often offer a “Christmas Club” or a specialized savings account designed to help you gradually save up for the extra costs associated with holiday spending. The account takes advantage of automatic drafting right from your paycheck and sets this money aside for the holidays. Typically the money is given back to you in early November, and you then have a ready supply of cash to help cover the many expenses of the season, including gifts, travel, hospitality, and special events. The best part is, when you stick to your pre-planned allotment, you can come out of the holidays debt-free.
Whether you enroll in a bank’s Christmas Club or not, you can still practice the same holiday budgeting that will help you manage this season of giving and spending incrementally throughout the year.
From Thanksgiving through the end of the year, the spirit of the season casts a spell over most of us, leading to both joyful generosity and rapidly depleting bank accounts. Sure, Emma and Caden wrote their letters to Santa a couple of weeks ago. Sure, you’ve already made your shopping plans, but you know they would love that amazing new toy that just caught your eye. You buy it anyway, often repeating this process many times over as you continue to shop.
Others don’t have a clear plan for what they will spend on Christmas gifts and adopt an “It’s only once a year!” perspective, which leads to overindulging, overspending, and overdoing.
In the end, both types of shoppers end up in the same uncomfortable position. The fun of those moments cannot justify the shock of exorbitant credit card bills in January and hundreds- if not thousands- of dollars of fees in interest on that debt.
The solution is planning and discipline and studies show that using cash will significantly reduce the amount you spend. Because cash is tangible, shoppers who pay this way are very aware of the money that is leaving their hands, whereas when we swipe or pay through a virtual system, it’s very easy to think we’ve spent less than we actually did. Those who swipe to pay consistently outspend those who pay with cash.
Maintaining a smart budget is also easier if you remain focused on the purposes of the season. Why are you celebrating? What is important during this time? Three months from now, will Sam remember if he received three presents or six, much less what they all were? Measure your potential spending against your family’s goals for the season. If the purchase will help you achieve a goal, consider it. If not, save your money!
Finally, if you do use a credit card for your Christmas shopping, keep records of your spending, and pay off your balance as quickly as possible. This will enable you to avoid those late fees and interest payments.
Prepare Now for the 2024 Holidays
If you find yourself wishing you had started planning earlier or feel like you’re already outspending what you’d hoped, use this holiday season as the perfect opportunity to learn. Save receipts for all of your spending. Keep those receipts throughout the season, and when all is said and done, pull out those receipts and categorize them. What did you spend on gifts? Hospitality? Entertainment? Special occasion attire? Family photos and greeting cards? Travel? Decorations? (and don’t forget to note fluctuations in your power bill from the normal amount!)
Evaluate your spending carefully. Where did you overdo it? Where do the surprises lie? Let the insights you gain from this year’s spending help to guide your budget planning for the upcoming year. Start the new year off right, and in January, pace yourself practically and consistently throughout the year. Perhaps 2024 is the year you can do Christmas debt- free!
Ten Great Ways to Have Holiday Fun without Breaking the Bank
- Attend a Christmas parade, the Holiday Lights Festival, and other local seasonal events.
- Find a free holiday concert on the community events calendar.
- Go Christmas caroling.
- Watch a Christmas movie at home, complete with sing-a-longs and themed snacks.
- Host a dessert and coffee gathering instead of serving a full meal.
- Take the family out for a Christmas lights scavenger hunt.
- Draw names among extended family and buy a single gift instead of buying for everyone.
- Gather two or three families of friends and host a holiday game night.
- Volunteer in a nursing home, community center, food pantry, or other charity.
- Limit the number and price of the gifts the children will receive.
Your Holiday Budgeting Skills Can Always Improve
If you don’t have the best track record for practicality during the holiday season, don’t despair! Learning to create and maintain a holiday budget is an ongoing process in which you can improve each year. Sometimes, it helps to have the insight and objective perspective you can only get from a professional, and at Hayes and Associates, we are happy to provide financial counsel, not only for holiday budgets, but for sound money management all year long. If we can help, give us a call. We’d love to offer you strategies to use your financial resources well.