‘Tis the Season to Spend…or Not

Believe it or not, the holidays are right around the corner and you know what that means – lots of toys, presents, and extra expenses. If you didn’t plan for your holiday expenses in advance, you may be tempted to rely on spending now and paying later. But that may not be your smartest move, especially if you don’t want to start the New Year with extra debt.

So what can you do to share the joys of the holidays without breaking the bank? Here’s a five-step plan to get you started:

1. Create a holiday budget. Take a look at what’s coming in, what’s going out for household expenses, and what’s left over. The amount left over is the maximum amount of extra money you can afford to spend for the holidays, plus any savings you have accumulated for the holidays. If you must to go beyond your budget, make a commitment to pay off holiday debt as quickly as possible so that you don’t end up paying a lot more for the items you purchased because of added interest or other carrying charges.

2. Find out everyone’s wish list. Don’t guess. Ask your kids what they really want for Christmas and then discuss their wants and needs with your ex to see what their plans are. If you can work together you can prevent duplicate gifts, the need to compete during the holidays, and your kids can get things they want and need. In some cases, this may even mean going in with your ex to purchase gifts for the kids instead of making separate purchases.

3. Create a list of everyone you plan to buy gifts for, assign a dollar amount to each one (based on the budget you created in Step 1), and shop early. In the case of your kids, don’t get upset if you can’t afford to buy everything on their list. However, if possible, purchase at least one item that is important to them. Whether you decide to get one large item or several small ones, stick to your budget. Sales should be everywhere this year, so take your time and look for ones on the items you want. And don’t be afraid to ask for a price reduction if you find something that’s not on sale. Many stores are willing to bargain and some are offering options like lay-away that can make your holiday shopping easier. By starting early you have a better chance of getting what you want at a reasonable price.
   
4. Don’t forget to celebrate the reason for the season. This usually doesn’t cost very much, and If there was ever a family season, this is it. Sometimes we get so caught up in the commercialism of the holidays that we forget to celebrate the real reason for Christmas. Spend time with your family and participate in family activities, share stories about what Christmas was like when you were a kid, and take your kids to visit family and friends they may not see too often. Make the holidays about family. This will create memories that will be much more precious than things you buy.

5. Plan and prepare for next year as soon as the holidays are over. Choose an amount that you would like to have available for next Christmas, divide that amount by 12, and set aside that amount of money each month in a savings account. This will allow you to relax and enjoy the festivities of the season without the burden of having to pay for it in the coming year.

Happy Holidays!

Patricia Stallworth, CFP, CDFA is the president of MindingYourMoney and PS Worth. With more than 16 years experience in the financial planning industry, Patricia is a sought after advisor, coach, and educator. Patricia assists people before, during and after the divorce process with managing, dividing, and growing their finances. Get more money managment tips and resources from Patricia at www.mindingyourmoney.net.

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