The holidays can be a wonderful time, but they often come with an extra financial strain. With gifts, travel, food, decorations, and other seasonal pleasures, expenses can add up quickly and may get you into unwanted debt. These tips can help you navigate the extra costs in November and December.
Set a Holiday Budget
To keep yourself from getting in over your head, create a spending plan before the holidays.
Look at your current budget to determine how much leeway you have for special holiday expenses. For example, if your utility bills go down in winter, you could allocate that extra money toward holiday spending.
Make a list (and stick to it!). Consider various spending categories like food and decorations, not just gifts, in your plan. Determine the areas you’d like to prioritize and build your budget from there. By seeing a grand total ahead of time, you’ll get a sense of what you can afford and adjust as necessary.
If your dream list doesn’t match your current finances, look for ways to reduce spending overall. If you don’t have the money to cover everything, talk to your family and friends about ways to scale back on spending without scaling back on fun.
By determining your budget ahead of time, you’ll have a better idea of what you can commit to and set expectations with others.
Pay with Cash
You can’t rack up credit card debt if you don’t pay by credit card. By paying in cash, you are more likely to stay within your budget. Be sure you have enough money to cover necessities like food and housing before you withdraw cash for the holidays.
Take Advantage of Perks
If you have a credit card with rewards benefits, maximize them. This may include:
Switching spending categories to increase cash back rewards
Redeeming benefits like gift cards, which can be used for presents
Taking advantage of 0% APR offers, price protection plans, in-store card bonuses, and other incentives your credit card company might offer
How you shop is just as important as what you shop for. Browsing stores online or in person without a clear idea of what you’re looking for or how much you’re willing to spend can result in spending more on items that aren’t important to you or a recipient. If you have a specific item in mind, check for promotions or sign up for emails to get discounts from retailers.
Be Cautious with Sales
If there’s an item on your list that’s in budget and on sale, enjoy the savings. But be careful not to overextend yourself simply because an item is discounted. It’s easy to get caught up in a sales frenzy — 50% off! Buy one, get one half off! — but you’ll save 100% by not giving into temptation when you don’t need an item.
Negotiate a Better Rate
If you currently have a balance on your credit card or anticipate accruing one, contact your credit card company to negotiate a lower interest rate.
Plan Ahead for Next Year
Mistakes happen. Maybe you’re heading into the holidays with debt already or you slip up on spending during the season. Come January, make a plan to reduce your debt. Start by paying off accounts with the highest interest rates first.
You can also use your holiday budget as a starting point for next year and save ahead. It’s much easier to put aside $100 per month for 10 months than to come up with $1,000 all at once. This approach takes discipline but can save a lot of stress and headaches.
Holiday spending is just one piece of the puzzle. If you want professional help with planning, taxes, and other financial matters, we’re here to help.
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