As the holidays approach, many consumers are scrambling to find money to buy gifts for their loved ones. There ARE ways to do this without going into debt. Here are some personal examples of ways that I prepare for Christmas expenses.
Using a Christmas Club account and paying for items in cash
Each year, my wife and I put money into a Christmas Club savings account. This is a wonderful way to stay organized and, more importantly, stick to a budget. Each paycheck, we have a set amount of money that comes directly out of our payroll, and gets put straight into this savings account. I am not saying you need to put a lot of cash in it each week. A little goes a very long way. For example, if my wife and I get paid on opposite weeks, and each put in $10 per paycheck (automatically), this adds up to be $520. This amount of money now becomes the (only) amount we allow ourselves to spend at Christmas time. Budgeting is a plan on how to spend your money, so let’s look at setting up a plan that is right for your family:
- Determine how many people you are going to buy for
- Determine how much you want to spend on each person
- Add up these amounts, and this becomes your “Christmas budget”
Once you have your dollar amount, take this number and divide by the number of paychecks you receive in a year. This is the amount of money that will automatically come out of your payroll, and go into your Christmas Club account, each time you get paid. At the end of the year, you have successfully saved your “budgeted amount” of spending, to avoid building credit card debt and going into the holidays with so much financial stress.
When you have a Christmas Club account, your bank will most likely cut you a check for the amount you have saved or put it directly in your checking account toward the end of the year. Be sure to check your mobile banking to see when it gets deposited, and be sure not to spend it on something else! Remember, focus on needs vs. wants. Once that money comes in, my personal recommendation is take out the cash, in large bills, and place it in an envelope. The reason I recommend large bills is that you are less likely to break a $100 bill than you would be a $20. When you are faced with purchasing an item for Christmas, you may think twice about it if you are going to have to break that “Benjamin.” This really helps us stick to a list. If you are in a committed relationship, I also recommend working together when shopping during the holidays. Hold each other accountable to make sure this amount of money gets you through all of your Christmas shopping. Also, working together when it comes to the area of personal finances is a wonderful thing. I have personally witnessed relationships improve when couples are on the same page when it comes to managing their income and expenses.
Automate your Christmas savings.
Set aside a certain amount from each paycheck and have it deposited into a Christmas Club account. It's an easier way to save, and even small amounts will add up faster than you think.
Make a list…..and stick to it!We often hear the saying, “Make a list and stick to it.” This is definitely not new advice, but one that we should always keep in the forefront of our minds, especially during the holidays. Write down what stores you want to buy from, along with what items you want to purchase. Do your homework and find out who offers these items at the best cost. A list can help you remember gifts you might have otherwise forgotten, so you are certain to save enough money, and maybe even a little extra to spend on your significant other.
Avoid overspending with credit cards during the holiday season
Stores often offers ways to save a certain percentage, just by opening a store credit card. Remember, they want you to spend money in their store, and this is a great way to get you to now overspend. The average person already has multiple credit cards in their purse or wallet, so be careful that you don’t keep adding to existing debt. When using credit cards, people are more likely to purchase items they don’t need. Just think about it. If you had one pocket with a credit card, and one with your hard-earned cash, which would you spend less with? Credit cards can tempt you to overspend, and you could end up paying for this year’s Christmas gifts (with interest), for the next 10+ years.
Save your change
To prepare for holiday expenses, save your change. All of it! Every day, empty your pockets or purse of loose change, and put it into a jar or piggy bank. I know this sounds old school, but this money does add up over time. As you get into the October or November months, take it to the bank and cash it in. This works as a great way to have some extra cash for extra items around the holiday season.
Take the first steps
Now that you have some action steps for saving money and being more prepared for holiday gift buying, it’s time to put them into action. With a little organization and planning, you and your family can enjoy the holidays without the burden of financial stress. It also takes you one step closer on your journey to being in charge of all your finances!
Copyright © 2018 ONB