‘Tis the Season...

To Think About Curbing Holiday Spending

Keeping track of expenses and sticking with a well-thought-out budget during the year are tasks that act as the building blocks for sound financial planning. However, as we enter into the busy holiday season, the temptation to deviate from the principles of financial wellness is around every corner. Spending above and beyond during this season of giving can derail your financial goals and put you—and your checking account—in a difficult spot for the New Year. In an effort to assist you in maintaining a healthy balance between spending and saving during the holidays, here are five fail proof tips to live by:

1. Create a Budget

According to Paul Golden, spokesperson for the National Endowment for Financial Education (NEFE), the first place people get into trouble during the holidays is not establishing a budget. Golden explains that 6 out of every 10 people say they do not set a limit for themselves when it comes to holiday shopping, and this often results in spending more than you can afford. Establishing a budget for holiday spending should start with a review of your current income compared to your required monthly expenses. When a surplus is available, set aside part of that amount for holiday gifts, parties, decorations, or cards. For some, remaining committed to a holiday budget may require the use of cash only as opposed to haphazardly swiping a debit or credit card. Golden also recommends taking your holiday budget with you whenever you leave the house as a reminder of your spending limits.

2. Make a List

While establishing spending limits through a budget is the first step in controlling holiday spending, creating a list of all the expenses you encounter during the season is equally beneficial. Golden explains that the majority of people have well-thought-out gift lists for family and friends, but ancillary expenses are all too often not included in a budget. For instance, attending an office or neighborhood holiday party may not come to mind as generating an expense, but a new outfit, a gift for the host, or a contribution of food or drink adds up quickly. Similarly, sending out holiday cards requires not only the purchase of the card, but the postage as well. Individuals may also incur costs for decorating their home or wrapping presents, all of which can add up to a hefty amount. Creating a list that includes each of these peripheral expenses in advance can help keep your holiday spending in check.

3. Limit Your Gift List

One of the biggest culprits in derailing a holiday budget is overextending on gift-giving, not only for friends, family, and colleagues but for yourself. Creating a list of the individuals you want to buy for and an amount you are comfortable spending is the first step; staying within those limits is the second. Golden follows up with a recommendation to develop a gift list that is both thoughtful and budget conscious by limiting the total number of presents you are giving this season. If you have already bought a gift for someone on your list, be diligent about not purchasing extra items for that person. Additionally, Golden suggests instead of purchasing for every member of the family, propose a gift exchange where each person buys one gift for another in the group. It is crucial to avoid buying items as a gift to yourself, as this can lead to overspending in a hurry.

4. Get Creative

If your budget is tight this holiday season, Golden recommends putting your creative talents to work. As a substitute for store-bought presents, you can create gifts to give on your own. For instance, a hand-painted coffee mug or a decorated journal may be far more cost-effective than a similar item purchased at a retail store. Creating your gifts takes undue stress off your budget, and you may find that whoever is receiving your handmade present appreciates it more than something bought off the shelf.

5. Plan Ahead for Next Year

The holiday season is not a surprise, and the spending associated with the end of the year should not be either. Golden makes a strong recommendation to those concerned about holiday spending to simply plan ahead. He states this can be done easily by setting up an automated savings plan at the beginning of the year and developing a budget and gift list as early as possible. If the amount of holiday spending leads to credit card use or negative cash-flow, Golden suggests focusing on paying down the accumulated debt as soon as possible. Cash gifts from friends and family members or a tax refund early in the year can help expedite the process if you find yourself overextended during the holiday season.

Expenses incurred during the holiday season do not have to derail the financial progress you made throughout the rest of the year. To ensure you are spending your money wisely during November and December, start with a solid budget that includes all the major and minor expenses you might incur, and develop a hard limit for gift giving. Once you begin your holiday shopping, keep your budget and gift list close, and use cash or your debit card instead of credit as much as possible. Should you find yourself underwater after the holidays have ended, be committed to establishing a savings plan and debt repayment strategy as soon as you are able. Following these tips will lead to a more enjoyable holiday season void of financial stress.

Source: Enrich, https://firstcomcu.enrich.org/articles/curbing-holiday-spending

Make a List & Check it Twice Holiday Gift List

Start your holiday gift planning with a list of all the people you need to buy for, what you are buying and a tentative budget. Then stick to it. Make sure to include stocking stuffers, white elephant parties and any service workers. Then use the last column to research sales and discounts, so you can get the best deal.

Total Budget: _________________

Keeping Track of it All Holiday Budget

Your holiday budget should consist of more than just the obvious, like gifts and groceries. It should include all additional expenses like Holiday Tips, Cleaning or Other Services, Travel and any Event or Entertainment costs. Below is a sample of just some items you might include.

A Recipe for Success Shopping Lists

The key to staying on budget is to write everything down and stick to your list. Below are some sample shopping lists. Your lists could be by category, store, event, or whatever works for you.

Using lists in conjunction with your Holiday Budget and sales flyers can help you not only stay on target, but help you find great deals and save even more! Make sure to compare prices and consider using store apps and rewards programs to get even more savings.

When buying groceries, you can keep costs down by buying generic instead of brand name, substituting frozen veggies for fresh and buying in bulk. But beware, only buy in bulk if you will use all of the items, and make sure to compare the price. Sometimes bulk pricing can be deceiving, and you don’t save anything, if you end up throwing too much away.