It’s the time of year when shopping becomes a major activity. The expenses of holiday gift giving, entertainment, and home decoration can take possession of the household budget. Many of us accept that the extra spending is inevitable – we defer the reckoning to the next year. As a financial
Here is some good advice from FINRA on how to avoid going into the red with holiday spending.
One of the best ways to manage holiday spending is to create a budget that anticipates more than just spending on gifts. These five steps can help you set, and keep a holiday budget:
1. Be like Santa and make a list. We're talking about more than a gift list, though that's important, too. Begin your list with what you have already purchased to make sure you're not buying twice or too much: the National Retail Federation notes that 41 percent of holiday shoppers get buying even before Halloween. Your list should include items such as plane tickets, holiday food and décor, and those holiday gifts you bought this summer at the beach.
3. Check your list for unnecessary expenses, or items that can be purchased at some other time of the year. The goal of this list is to itemize expenses that fall outside of your normal monthly spending, so you do not spend too much. It's also a good idea to designate which items you intend to purchase with cash and which gifts go on plastic. This can help you control credit card spending.
4. Compare this list to your regular and out-of-pocket monthly bills, such as mortgage or rent payments, car loans, utilities and daily expenses from gas to dining out. If you don't track those expenses, start now. Use this worksheet to track your spending.
5. Review the numbers. Now that you can see how you spent—and plan to spend—your money, look for ways to save. Some strategies may be simple, like cutting back on holiday entertainment or decorating costs—or reining in your urge to own another reindeer sweater. The holiday season is also a good time to review your current cell phone or cable packages and inquire about special offers that could save you money for many months to come (but be sure to read the fine print).
Taking control of holiday spending is a gift that can pay big dividends in the coming year. If you do a good job, you can accomplish other financial goals, such as building up your emergency fund or increasing your retirement savings.
Budgeting doesn't have to be hard or painful. Look for more articles in the Personal Finances section of my resources library. I can help you develop budgeting as a tool for making decisions about your financial goals and retirement plans. Have questions? Get in touch today!
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.