Ladies and gentleman we are officially halfway to Christmas! Can you believe it? As happy as Christmas makes me, it can make a bank account take a substantial hit for which it wasn’t prepared. Take a few moments and ask yourself “How much am I going to spend on family and friends this holiday season?” Grab a calculator or a trusty pencil and paper and do the math. Guys, maybe you want to buy your girlfriend a pair of diamond earrings or a necklace. Like many parents, it is very important to me that my kids get something they really want for Christmas. Some of my greatest childhood memories came from Christmas Day. In 1991, Santa got me a Super Soaker 50. In 1993, my parents got me a Sega Genesis.
As we are already halfway through 2015, here are a few strategies that you may consider when financially preparing for the holidays. Get started now!
- Discuss, with your spouse, a budgeted or set amount total that you plan on spending on each other and your children. Don’t forget to also budget for extended family and friends. Make sure you prioritize around a realistic and affordable amount to spend and don’t divert from that amount.
- Set aside 2% of each paycheck over the whole year to prepare for gift buying. If you bring home $800 on your paycheck then you would set aside $16.
- If your employer offers a “Christmas Club” account, then you can automatically have funds deposited into this account on each payday. You can then access the funds in December to purchase your gifts!
- Review your monthly budget and see if you can see areas for some budget reductions. If you buy a Starbucks drink 5 days per week this could very well be $20 per week which essentially amounts to $80 per month! If you cut your Starbucks visits in half then you could set aside $40 per month instead for gifts. $40 per month equals $480 per year! Apply this basic strategy toward your own luxury spending or other areas in which you have cut back.
- Avoid putting your gifts on credit cards unless you only want the rewards points and plan on paying off those credit card purchases within the 2 months. It can be very easy to pull out the credit card and overspend from your planned budget, especially during the holidays. Leave the credit cards at home and locked away if need be. Don’t allow yourself to pulled into the “It’s only once a year” mentality. If you aren’t careful, you may not be able to afford gifts the following year if you acquire too much debt!