It’s hard to believe, but Thanksgiving is THIS MONTH. The October Classic is in the books (congrats to the KC Royals), and parents everywhere are enjoying their parental “Candy Tax“.
It feels like a seasonal page has truly been turned. And right around the corner will come the Christmas and other winter holidays. Stores are already stocking their shelves with gear.
That’s why now is the perfect time to start planning for your holiday spending. Even if you are a family of significant means, it’s a good idea to be strategic about how you go about it.
And by formulating a plan now, you’ll achieve more than just the happiest of holidays. You’ll ensure that the New Year will begin without worries of too little cash flow or that you went unintentionally overboard on your spending (and maybe creating some spoiled offspring in the process!).
Campbell On How To Make The Most of Your Holiday Spending
“Whatever is worth doing at all is worth doing well.” – Lord Chesterfield
The best place to begin when it comes to planning for this year’s holiday spending is to examine what you did last year.
Dig up the credit card statements online (and maybe the checkbook registers if you still roll with those!), and add up how much money you spent. You’ll also want to take notes regarding where you spent it. Don’t forget to include money used to purchase gift wrapping supplies, cards, postage, food while shopping, entertainment costs, decor, and special-occasion clothing.
Now that the numbers are in front of you, it’s time to form an opinion.
How do you feel about last year’s spending? Did you spend a realistic and appropriate amount, or did you go overboard? Try to be objective. This analysis will serve as the backbone of your plan.
Look at the Present … And That Pun Is Intended
Financially speaking, how have you fared this year compared to last year? Be sure to look at any changes in income as well as expenses. If your finances haven’t changed and you’re happy with last year’s spending, then you’re starting off in very good shape. If your overall financial status has declined, or if you were less-than-pleased with last year’s performance, then you’ve got some work to do.
Begin by looking at the number of purchases you made a year ago.
Which ones would you make again and which ones have you scratching your head? It may be time to reduce your gift-buying list or change the amount you spend on each purchase. The obvious way to accomplish this is to be less extravagant with your selections. A less obvious but often effective approach is to research your potential purchases. Sometimes you end up paying extra for the convenience of one-stop shopping, so look through the newspaper to find which stores are offering deals.
Then check online to see if you can beat their prices by purchasing somewhere else. This practice will cut down on last-minute shopping, which can be an expensive proposition.
Think About Future Years
So, you’ve figured out how many purchases you need to make, as well as which ones need scaling back in terms of price. Now it’s time to create a budget. Once again, there is no magic formula. Creating a budget and sticking to it requires two main things: common sense and commitment. Let’s take a closer look.
A budget should always be based on the money you have, not the money you can borrow. If you are still paying off charges from last year, then you need to avoid using credit cards to make gift purchases this year. The amount of money you decide to allocate toward holiday spending should be based solely on what you’ve saved or what you will save from now until the time you start shopping.
When drafting your budget, start by creating a list of recipients, along with columns for the gifts you intend to buy and the dollar amounts you expect to spend. (Is that too uptight? No, I don’t think so.)
As you make purchases, keep track of the results. If you overspend on one gift, it is imperative that you make it up somewhere else. Your diligence is one of the keys to staying within your budget.
It’s also important that you watch out for potential pitfalls, including impulse shopping. Getting into the spirit of the holidays is one thing, but spending frivolously based upon a last minute decision is something else. You’ve got a list, and your job is to stick to it!
One final thing that may need an adjustment is your overall philosophy. It’s easy to look at the budget you’ve created as a restriction. After all, it’s nothing more than a set of rules. The flip-side is that these rules are there for your protection. Sticking to them will not only help you feel comfortable about your finances before and after the holidays, it will free you from the stress that comes from accumulated debt. When you look at it this way, a budget can be downright liberating. Give yourself the gift of a financially stress-free holiday, by planning in advance.
We thrive based on your referrals, and are truly grateful for them. Thanks again.
Jeffrey A Campbell CPA