The Dollars and Sense of Holiday Budgeting
by Linda Stroman
Can you believe that 2007 is rapidly coming to an end? For many of us this is a favorite time of year. The holiday season can bring joy and wonderful memories, but, if you’re not careful, it can take also take a toll on your financial health. Poor financial planning can lead to overspending and deeper debt. Don’t let the holidays undo all the good work you’ve done to stay within budget for the year.
Here are some holiday tips and strategies to help you stay on track:
Consider giving a “priceless” gift. The giving of time and services is much more valuable than something with a pre-determined price tag.
- Draw names and giver fewer, nicer gifts. This works well, particularly in the workplace.
- Shop online. The beauty is this can happen at anytime of the day and possibly spare you from the holiday “hustle and bustle”—including long lines. Window shop online to determine the websites that can offer the best deals (including free shipping). For more advice on saving money online, read our previous column on online shopping. Best of all, most things can be delivered directly to a home or work address!
- Avoid last minute shopping. Shopping under stress can lead to poor purchasing decisions. If the plan is to visit or see someone after the holiday season is over, wait to purchase gifts or even supplies.
- Give to a cause. If someone has a charitable organization or event that is near and dear to them, making a donation, in their name or in general, could be a nice gift. You may also benefit by getting the tax break for the donation.
- Don’t “shop until you drop.” Maintaining good financial health also means maintaining good mental, physical, and emotional health.
And if you want to get a jump on holiday planning for next year, it is never too early to plan and evaluate spending desires for the holiday season. There are some that get a head start and shop throughout the year, purchasing gifts as they travel or locate sales and clearance items. In any event, it is best to draft a plan of action and take the time to determine a “true” holiday spending guideline. Some financial planners recommend putting no more than 1.5% of your annual income ($375 per $25,000 of annual income) towards holiday spending. Keep in mind that holiday spending can be divided into several areas: gift giving, charity, cards, postage stamps, decorations, baking supplies, specialty foods, gift wrapping and bags, party supplies, travel arrangements, and flowers. With more time to plan, you can compare income and savings to credit card debt, living expenses, and other financial obligations. This can help you determine how to prioritize your spending plan in anticipation of your holiday needs and wants.
The Internet is a fabulous tool and websites like www.betterbudgeting.com and www.practicalmoneyskills.com offer tips that can help you breathe easier during and after the holiday season. Many financial institutions can also help determine the best means for starting a holiday spending account. In previous columns we discussed options for opening no monthly or minimum-balance fee savings accounts, visit http://dcsaves.org/resources/accounts.asp for more information.
Planning ahead could also keep you from having to supplement income to cover excess spending by taking on part-time employment or trying to secure overtime hours at work. Working extra hours could add stress and limit time for proper holiday season enjoyment. Using cash or ensuring that enough funds are available for “wiping out” credit card purchases should be part of any plan and can keep you from overspending.
By minding your financial health, you can better focus on the joys that the holiday season can bring (and stay on track to achieve your financial goals)!
