It’s hard to believe it’s that time of year again, but the holiday season is right around the corner. If you’re like me, you get a little stressed with all the holiday get-togethers, shopping and spending. Thankfully, there are some simple ways to maintain your sanity and keep the holidays affordable this year.
1. Set a budget for the holidays.Budgeting is always a great idea, but it’s hard to know where to start. My suggestion? Review your expenses from last year’s holiday season. Be honest here and include what you spent on things like cards and postage, gifts, decorations, parties and so on. Once you’ve calculated what you spent last year, decide if that amount is still okay based on your current finances. If last year’s expenses seem excessive, figure out areas where you can cut back this year. Determine what you can comfortably spend on all holiday expenses this year, write down that amount and commit to sticking to it no matter what.
2. Make a list. Check it twice … maybe even three or four times.Write down your planned holiday expenses, and be specific. Record each person on your gift list, note any decorations or cards you want to purchase, and don’t forget potential expenses like special holiday meals or outfits. Now, take the amount you determined for your budget and break it down for each of these expenses. How much can you spend for each gift? Decorations? Travel? If there’s not enough in your budget to cover all your expenses, go through your list and establish different spending limits. Be honest with yourself about what you truly need to buy this holiday season versus what you just want to purchase.
3. Actually stick to the holiday budget you established.This is easier said than done, but put the effort into maintaining your holiday budget now — you’ll be thankful once the season’s over. Spending money we don’t have and buying things we don’t really need are huge financial stressors. Try to view budgeting as liberating — fully committing to your financial plan can free you up from holiday stress and help you avoid last-minute temptations that just lead to buyer’s remorse later. So, what happens if you don’t stick to your budget? I admit that every holiday season it’s inevitable I’ll overspend on gifts for my mom. When this happens, I go back to No. 2 and review my list of expenses. When I overspend on something, like gifts for my mother, I find another area where I can cut back and try not to beat myself up over it.
4. Figure out how to pay for everything.Ideally, we can pay for all our holiday expenses with cash, but this is not always an option. If you use a credit card or other loan this season, establish how much you can buy on credit without causing post-holiday stress. It’s usually easier to track your spending if you only use one or two low-rate credit cards or loans for non-cash purchases. Double-check the interest rate, payment terms, and fees for any credit cards or loans you use, and be sure you’re getting the best rate and terms available.
5. Start looking for sales now.Don’t wait for Black Friday, Cyber Monday or last-minute deals. You’ve made your shopping list, so you know what items you need. You’ve also created your budget, so you know what you can spend on these items. Now it’s time to keep an eye out for sales, special offers and coupons. It’s rare you’ll find every item you need on sale at the same time, so plan to do a little shopping here and a little shopping there to get the best prices. Many of us (including me) are guilty of waiting until the last minute to shop and then wind up paying full price for everything. Learn from my mistakes, and look for sales now. Words of warning: If you buy gifts early, be careful to avoid buying extra gifts later on. Don’t feel compelled to shop all the way through December if you already bought what you needed earlier. Maybe you enjoy going to the store during the holidays or truly love shopping on Thanksgiving weekend. If that’s the case, just work that into your plan ahead of time so you don’t overspend. This is where that budget and list come in; follow your list, and only spend the amount allotted to each of your purchases. Follow these simple steps, and you can avoid a lot of financial stress this holiday season. Remember, one of the best gifts you can give yourself and your family this year is to avoid excessive debt, overspending and the stress that goes along with these. Happy holidays!
April Clobes is Executive Vice President/Chief Operating Officer for MSU Federal Credit Union in East Lansing. She can be contacted by e-mail or by calling (517) 333-2254.