Budgeting for the Holidays
‘Tis the season…to overspend.
To avoid getting caught up in the holiday frenzy, the National Foundation for Credit Counseling (NFCC) offers the following information and advice on how to avoid overspending and maintain good financial health during the upcoming holiday season:
- Have a budget. Write down household and personal expenses for November and December. For each month, subtract the total amount of expenses from your monthly take-home pay. The amount left over each month becomes a starting point to gauge how much you can afford to spend.
- Makin’ a list, checkin’ it twice. And so should you. Tally the people you need or want to buy gifts for, including small gifts for babysitters, teachers, newspaper deliverers, etc. These small gifts can add up and are often the cause of going over your gift budget. Don’t forget to include money you’ll spend on holiday cards, postage, parties, decorations, entertainment, etc.
- Get creative. When it comes to gifts, remember it’s the thought that counts. Consider gifts that have a personal touch, such as hand-made and homemade gifts like tapestries, quilts, pastries or other prepared foods. Don’t forget about fruit baskets, which are both economical and healthy!
- Shop for deals. Check out retail sales, special discounts and coupons in circulars or newspapers and deals online. Consider purchasing holiday decorations in-bulk and splitting the costs with friends and family members. These deals can add up to substantial savings.
- Don’t be a dasher. Shopping under stress can lead to more spending. Plan your shopping trips in advance and shop as early as possible before the holidays.
- Stick to your limit. NFCC advises that you pay with cash when possible and leave your checkbook and credit cards at home to avoid temptations for unplanned and unnecessary purchases. If using credit is a must, limit purchases to one card. Use the credit card with the lowest interest rate and don’t use more credit than you can afford to pay off in 90 days or less. Remember, credit card debt amounts to a short-term loan. The longer the length of the loan, the more you will pay.
If you spend within your budget, you’ll avoid the post-holiday debt hangover and who knows…you may have a little left over to treat yourself!