As much as I would love to tell you to take the holidays off from having to worry about money, the fact is, the bazillion dollars we Americans spend every year celebrating Christmas, Hanukkah, and New Year’s are all the more reason to be responsible about your finances. The blur and excitement of the season can have you blowing your cash as if it were Monopoly money, and if you aren’t careful, you’re gonna wake up in January with a worse feeling of dread than you did the morning after your office party with vague memories of drunkenly puking on your boss’s shoe.
If you’ve set aside money to cover your holiday expenses and are noting all your purchases in a shopping spreadsheet, you’re way ahead of most folks. But even the seemingly responsible holiday budgets will be dashed faster than your hopes of holiday weight loss if they fall victim to some common budget-blowers. For a head’s up about some of the common pitfalls you need to avoid, The Frisky asked David and Andrea Reiser, the money-savvy husband and wife team who authored Letters From Home: A Wake-up Call for Success & Wealth. Follow these tips so that January can be about recovering from overindulging in the calories, not overspending.
Develop a detailed budget – it’s not too late. Commercials are now tracking the time you have left to shop in days, not weeks – but if you have shopping left to do, gifts to wrap, or parties to attend, it’s not too late to develop or revise your budget. Determine how much you can responsibly spend and let that drive what you purchase, not the other way around. “A great way to keep yourself accountable is to put your budgeted Christmas cash on a pre-paid card. You’ll watch your budget more carefully and when the money is gone—it’s gone. You’ll be less tempted to add just one more gift to the pile because of a super sale,” the Reisers suggest.
Think outside the gift box. When you’re creating your budget, make sure you account for all the little expenses that come with the holidays, not just the cost of the gifts. “If you aren’t careful, some of the more costly aspects of the season will sneak up on you and your wallet—and will leave you paying for it (literally!) in January. Whether you’re feeding your family, bringing a dish to the office potluck, or hosting an event, grocery bills can add up at an alarming rate this time of year. Don’t forget about the little extras, like the holiday tip for your hair stylist and mail carrier or the gifts for the kids’ soccer coach or piano teacher. And those twinkling Christmas lights give your power bill a boost—so think ahead for the next month’s budget. Try to anticipate what you’ll need to spend—down to the tiniest of details—and plan accordingly,” say the Reisers.
Add a cushion. No matter how carefully you plan, chances are you’re going to forget to account for something, like the fact that while you can wear the dress you bought on clearance last year to the office Christmas party (score!), you don’t have a pair of shoes to match it (fail). “Think about padding up to 15% more than you think you’ll need,” suggest the Reisers. “If you wind up with some of that cushion left over, use it to score some holiday clearance bargains for pennies on the dollar, and stash them away for next year.” Don’t be afraid to set aside more than you need…I doubt many people have found having too much cash around the holidays is a problem. And I can’t be the only one who forgets to purchase a gift for someone I really should – like the elderly widower across the street from me who always rescues my trashcans after our prison inmate trashmen throw it into traffic. These last-minute gifts can put your budget into a fishtail (like the cars avoiding my trashcans) if you haven’t set aside money to cover them. Need more motivation? Tell yourself that any money left over can be used to purchase a smoking hot dress once you’ve followed through on your New Year’s resolutions.
Be honest with your friends and family. Maybe last year you were banking and could afford to be the cool aunt who threw noisy and expensive toys at your sister’s kids and exit before they figured out how to turn the audio on. But if your situation has changed and your holiday budget is lower than it was last year, don’t be afraid to admit this. “There’s no shame in readjusting the scope of your gifts in order to avoid a sackful of debt,” say the Resisers. “If your loved ones truly care about you, that’s the last thing they’ll want! And they might be relieved to know that breaking the bank is not this year’s expectation.” Remember, the economy has affected almost all of us – don’t assume you’re the only one who’s feeling the crunch. Trying to spend more than you can afford rather than telling your nearest and dearest that you’re on a budget is wrong on tons of levels, so let yourself off the hook now rather than getting into a bind just to save face.
Borrow from your neighbors, not your credit card company. It used to be that borrowing a cup of sugar was a cliché, but nowadays we rarely knock on the neighbor’s door to hit them up for a loaner. But the holidays are a great time to borrow things from them – and your girlfriends. “Say you’re planning on hosting a gathering at your home for your thirty closest friends … but you don’t have a punch bowl, enough serving platters, or a good variety of holiday music CDs. The temptation is to rush out and buy these items, but wait—is there anyone from whom you could borrow them instead? You can return the favor at your neighbor’s New Year’s Eve bash, and your wallet will thank you,” say the Reisers. And hey, you never know … maybe this is the perfect excuse to talk to the single hottie who recently moved into the condo down the hall.
Keep a list for next year. As you spend money on things, especially things you forgot to include in your budget, make sure you make note of them. This will give you a starting point for next year’s budget … or at least a wake-up call that you spent too much on stupid stuff that added up. (Did you really need $50 worth of turquoise ribbon?) And don’t be scared to strike someone from the list of people you purchase for (or invite to your parties) next year. If they seemed surprised to receive a gift from you or didn’t have one in return, it may be time to stop spending money on them.
The Money section and all articles within it are sponsored by Free Credit Score; however, the articles are all independently produced by The Frisky and the opinions and views expressed by the writers and experts are their own.