Christmas in March?
I know what you're thinking. I just started planning my summer vacation, why are we talking about Christmas? The fact is, Christmas will be here before you know it. Don't get caught off guard!
Every December I see people stressing about how they will pay for everything that the holidays bring. Some of you may still be paying off your credit card from last Christmas. Why do we let the holidays sneak up on us? There are a few things you can be doing now so that your Christmas spending doesn't leak into the new year.
Create Your Christmas Budget NOW!
Sit down now and start planning what you will spend this year. This is actually a great time to do it since last Christmas may still be fresh on your mind. Write a list of people that you want to buy presents for and how much you want to spend on them. You don't necessarily have to start shopping for them now, just set a price limit on their gifts.
Next, jot down any travel plans you may have. While nothing may be set in stone yet, we typically have a good idea of where we will be spending the holidays. Is this the year you travel across the country to see your in-laws, or will you be driving 3 hours to your sister's house? If you're not sure, plan for the most expensive option so you're prepared if it happens.
Maybe your family will be coming to see you for the holidays. Be sure to estimate how much it will cost for food and activities while they're here. Don't forget Christmas cards, stamps, the cost of shipping packages, and any extra charitable donations you may make. Does your family have any traditions? Try and think of anything else you do that may cost money.
Once you’ve thought of everything, add all of your expenses together and create a total budget for the upcoming holidays.
Divide the Total Across the Remaining Months
Do you have your magic number? Were you shocked by how expensive the holidays can be? Now that you have your holiday budget, take the total and divide it by the number of remaining months. If you were to start this in January, you'd divide your total number by 12 and the result would show how much you should set aside each month. Since it's already March, you’ll need to divide your magic number by 9. For example, if your Christmas budget is $900, then you need to set aside $100 each month between now and December.
I recommend moving the cash to a separate savings account so that you don’t accidentally spend it. Another option is to put it in an envelope and stash it away in a lock box at home. Moving it out of your checking account is the most important thing. Seeing that extra money sitting in there can create temptations to spend it.
Once December Arrives, Stick to Your Budget!
This can be the hardest part about budgeting for Christmas. I know that Andi and I can easily go overboard on the gift buying. However, when we set a specific price for each person, we feel challenged to find a great gift that matches our limit!
Try and come in under budget on everything you do, even if it's just a couple of dollars. Use coupons and sales throughout the year to snag the best buys. Andi is a bargain shopper. Finding great items for less than what we budgeted gives her a thrill. She has a gift for finding the perfect present without breaking our bank. What if you started the new year with cash in your pocket rather than credit card payments?
A great way to stay within your budget is to avoid buying gift cards. They may be a quick and easy gift, but they prevent you from saving money. Typically, gift cards are excluded from all coupons and sale prices. This means a $25 gift card costs you $25. However, if you find a $25 toy for your nephew that is 20% off, you are able to get him a great gift and save $5. Not only is this option cheaper, but also it’s more personal and shows that you put thought into your gift. Imagine how much money you would have left over if you saved $5 on each present.
Don’t let finances cast a dark shadow over your holidays. By creating a plan now, you can truly focus on the important things when Christmas arrives. This could be the year that Santa leaves cash in your stocking instead of a stack of credit card bills!
Have questions? I'd be happy to sit down with you for a FREE one-on-one consultation.
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