Does this time of year stress you out financially? I know the holiday season can be a financially challenging time. In addition to the cost of gifts for friends and family, many people have extra expenses for travel, entertainment, food, decorations, tipping, charitable gifting, and utilities. The holidays don’t need to cause financial stress and they don’t have to. This year, while there is still time, take these 10 steps to reduce your stress and holiday spending:
Create a Holiday Spending Plan – Include gifts, of course, but also hidden costs of gifts such as wrapping and shipping. Also factor in other expenses noted above. A great online Holiday Spending Worksheet is available at http://www.bankrate.com/calculators/savings/holiday-spending-calculator.aspx.
Match Expenses to Income – Determine how many paydays you have left from early November through mid-January. Match holiday spending to your income, including any year-end bonuses, so expenses are paid with current income. For example, if you have $900 of holiday expenses and six paychecks, you’ll need to set aside $150 per paycheck
Play the Float – Always try to time charges on credit cards so bills can be paid in full when they arrive. For example, if your statement ending date is the 3rd of the month and you buy things on the 5th, you may have six or seven weeks before payment is due.
Use Credit Cards Wisely – Don’t charge more than you can repay. Remember, a bargain isn’t a bargain when interest is added to a purchase! Check your account statements to make sure all charges are correct and avoid unnecessary expenses such as late, over-the-limit, and cash advance fees and penalty APRs.
Make a Gift List – List the names of people/families receiving gifts and determine a monetary value for each gift so the cost of all gifts stays within your overall holiday. Then stick to the list. For a helpful worksheet, see http://www.vertex42.com/ExcelTemplates/christmas-gift-budget.html.
Look for Bargains – Specific strategies include deeply discounted online deals with free shipping, online and print coupons, “door buster” sales at certain hours, and high-end thrift shops.
Set Realistic Expectations – If your budget is tight, have a conversation with family and friends about ways to cut back. For example, consider replacing individual gift-giving with drawing names and buy one nice gift rather than many gifts.
Make a Gift – Homemade gifts show thought, effort, and love. Consider baked goods, fancy pillowcases, photos, artwork, and embroidered, personalized items. Try gift certificates for car washes, pet-sitting, house-cleaning, or baking.
PowerPay Your Debt – If you run up an outstanding balance, use the free online Powerpay program to pay it off quickly. Powerpay (http://www.powerpay.org) generates a debt repayment calendar. As soon as you pay off a debt, apply its monthly payment to another starting with the highest-interest rate first.
Save Now for 2017 – Open a “Holiday Club” or similar savings plan with a bank or credit union. Make regular deposits throughout the year. Come Fall 2017, you’ll have the money you need without the stress of having to cut spending or use credit for purchases.
Take charge of your finances to get the most out of the upcoming holiday season without financial stress.