Holiday Spending Made Easy

It is amazing how one time of year can bring about feelings of warmth and joy while simultaneously causing stress and anxiety. We have been conditioned to believe we need to strive for the ‘perfect’ holiday, with all the trimmings that come along with it. And with this in mind, the holidays become an exercise in over spending and financial stress.

If you don’t have the money set aside for the holiday season, there is not much to recommend to help eliminate the stress. There are however, still some things you can do to make sure that you don’t spend more than you can afford: Some of these tips include:

• Only buying for those closest to you.
• Draw names or do Secret Santa’s instead of buying gifts for everyone.
• Make dinner pot luck so everyone shares the costs of extra food and drink.
• Buy your holiday wear from consignment shops.

What we can do, is make sure that this is the last year that money issues prevent you from enjoying the holidays to their full potential. If we put the right plan in place, next year you should already have all the money you need when the holidays roll around because the cost should be incorporated into a prepared budget or financial plan. To make sure everything falls into place accordingly, it’s important to start the work now.

The first step is to start keeping very diligent records of your spending this holiday season. You can keep every little receipt, buy a notebook and write it down or even use your phone to keep records. Make sure you can identify the category for your purchases so you can later identify if you are happy with the cost of each expenditure. Categories could include extra food costs, clothing and accessories, gifts, wrapping / decorations or anything that makes sense for your family.

After the holidays, tally up all of your costs both by category and by total amount. From there, you can determine whether you are happy with what you are spending. Are you surprised by the cost? Can you identify areas where the cost is out of synch with the value of the item purchased? Or maybe you were pleased with what you spent and would make no changes if you did it again. What you are working towards is a budget for spending that you can use as a guide for next year.

Once you have decided what you are going to spend next December, divide that cost by 12 to determine the cost on a monthly basis. This is the amount that you need to put aside each month to make sure you have the money you need to accommodate holiday costs next year. If this amount does not fit in your monthly plan, it’s time to go back and reduce your holiday budget so that you can afford the monthly cost without jeopardizing your other expenses.

When you are happy with the cost you must set aside on a monthly basis, decide where you are going to put the money. Should it go into a savings account? Do you want to put it into a Savings Bond or other investment? It should be deposited into an account that you can draw from within a year’s time. Long-term investments that charge penalties when you withdraw early are not ideal for this purpose.

When you have the money you need to purchase the things you want to enjoy your holidays it can ease that part of the stress completely. The holidays are not about what you buy, but it’s fair to say that everyone wants to look their best and treat themselves and their family to something special. With a proper money management plan in place it is a little bit easier. Start planning now to make sure this is the last year that you worry over holiday spending.