I was hoping to get you this letter before you started your Christmas shopping but I didn't want to interrupt a turkey dinner.Christmas is a wonderful season filled with family, friends and gift giving. Sometimes we can get caught up in the emotions of it all and put a real strain on our paycheck.
How many of us have opened the credit card bill in January and realized it will be months before we pay off the holidays?Here are some tips to prevent (or at least minimize) that holiday financial hangover:
1. Remember the reason for the season. This is a celebration of the birth of a baby. It is about people, relationships and gratitude – not material items, decorations or entertainment.
2. Shop with a Gift Plan. Make a list of everyone that you will be shopping for. Set a target budget for each gift, and strive to write down what you want to give them before getting online or stepping into a store. Prioritize your list and be willing to cut it down a little. You can make something in your kitchen as a gift for those acquaintances that aren't family. Fight the urge to go completely overboard with the kids. Focus on something you can do together rather than an expensive material toy.
3. Create a Holiday Budget. Going into the holidays without knowing what expenses you intend to have is a recipe for a real January headache. Sit down and make a list of all your out of the ordinary holiday expenses and put a number to them. Your Holiday budget will probably include some of the following items:
Christmas Gifts
Travel
Decorations
Entertainment
Increase in Groceries
Create a budget for every line item. If you are married, make sure the plan is developed together.
4. Use Cash. It is way too easy to get into trouble using the plastic. It's painless until you see the result. Consider creating a cash envelope with your budgeted amount of money in it. You can remove cash for online purchases also and put the cash back in the bank. This will serve as a reminder of how much you are spending along the way.
5. Plan for next year, If this is the first Christmas you've tried to manage a budget, it is likely to be a little bumpy. Between Christmas and New Year, before you have to go back to work, create a plan for next year based on how this holiday went. Decide how much money you would like to have set aside for the holidays and make a New Year's resolution to save money for Christmas so you will have it when the time comes.
If you would like to manage your money a little better next year, make a resolution now. Resolve to plan for your expenses, save for major purchases and goals, and keep a budget to make that all happen.If this sounds like something you want to do, but aren't comfortable with making it happen, give Three Points Financial Coaching a call.