How to Manage Your Holiday Finances
This article was recently published in CommunityAmerica's "Let's Talk Money" section of the Kansas City Star.
Although this may be the most joyous time of the year, it’s no secret these next few months also bring a major increase in spending. With all the gift buying, traveling, and party planning, it’s important to revisit your monthly budget to ensure you have a financial plan in place to cover these extra expenses.
Here are 3 key tips to manage your holiday spending this holiday season.
Set a Holiday Budget
To better understand the funds you have available for holiday spending, determine the total amount of income you have over the new few weeks, subtract any bills that are due in this timeframe, and make a list of any holiday-related purchases you know you have coming up to see if you’re on track.
In addition to determining how much you can afford to spend on gifts, also consider food, decorations, travel and other holiday expenses in your budget as these can add up quickly. If you’re traveling during the holidays, book your flights and accommodations early to get the best deals. Consider alternative travel options like carpooling or taking a train to save money. And remember to factor in a small amount for unanticipated expenses - even if it’s only $40 or so.
When it comes to purchasing gifts, here are a few budgeting tips:
Many retailers offer significant discounts during the holiday season. Black Friday, Small Business Saturday, and Cyber Monday are great days to make the most out of sales and your holiday shopping budget.
If you plan to shop in-person, one method many people find effective is to use cash when shopping. That will ensure you stick to your budget, rather than charging purchases to your credit or debit card. And remember to save your receipts for what you buy.
Even on mega sale days, not everything is a good deal — or even a deal at all. It is likely that items will be repositioned in the store with the same regular price advertised in a bigger, flashier way to persuade shoppers. Research ahead of time to ensure you are getting a deal. Also, consider researching other retailers online to compare prices.
If you are an online shopper, you may be familiar with the cart trick. Many online retail stores are looking for you to close on your purchases. Sometimes if you place a desired item in your shopping cart but don’t complete the purchase, you may receive an email offering you a discount. If you can wait a few days on your purchase, it could be worth the effort. If your gift is a popular item and you have it in your cart on Amazon, you will receive an email notifying you if that gift becomes the “Deal of the Day” at any point throughout the season.
Use Credit Wisely
If you’re using a credit card to make holiday purchases, be mindful of your spending. It’s easy to rack up a large balance that you’ll have to pay off eventually. Try to pay it off in full each month to avoid interest charges.
When to consider using your credit card this holiday season:
When to avoid using your credit card:
Get a jump start on the holiday season for next year by opening a Holiday Savings account. This account helps you put money away all year so you can get a jump on the gift-giving season. And then on November 1, the money you’ve saved is automatically deposited into the savings or checking account of your choice.
The holiday season doesn’t have to be a financial burden. With a little planning and discipline, you can enjoy the festivities without worrying about your finances. CommunityAmerica’s Financial Well-Being Coaches offer free expert guidance on budgeting, improving your credit score and managing debt. Start your customized holiday financial plan with a Well-Being Coach to help you achieve financial peace of mind.