By: Amy Miller, AFC®
As I mentioned in my last blog, people are hoping to cut holiday spending this year, however, odds are, the opposite will actually happen. Knowing that I thought I would come up with a few things we can do to cut back and ensure we don’t go bankrupt before the new year.
We can’t attempt to cut back at the holidays without first setting a budget. You must prepare yourself to be as financially healthy after the new year as possible and to do so, you really must first ask yourself some real (and somewhat hard) questions…….
How much can I reasonably spend on gifts?
What amount can I take from my account(s) without it interfering with my monthly budget and bills?
Will I have to go into debt for these purchases? If so, how will I finance it? How will I make the payments? How long will it take to pay this off?
Being honest when answering these questions can be a challenge. We have all, at one time or another, tried to rationalize spending…….it’s the holidays, it’s only once each year, I can make payments, and so on – which is what leads to overspending. It’s a lot easier to say we will just worry about it later……until the bill comes in.
Now that we have that out of the way, let’s get into a few ways we can all cut back on spending to stick to that budget this year!
First, make a list – who are you buying for? Is it necessary to buy everyone on your list a present? Some suggest making your own naughty and nice list. Cut people that aren’t necessary. Truth is, it may not be an issue or even noticed. Annually, it is reported that 1 in 10 people return their gifts to the store…… which equals about $15.2 billion in unwanted gifts! WOW! This could also relieve pressure from others that feel obligated to give you a gift in return. Evaluate who is important and who can go……I’ve been told that if you don’t know what the person would LOVE, then you don’t know them well enough to give them a present. (not sure I totally agree but it’s worth some thought)
Focus on making gift-giving meaningful. It’s great to be in the holiday spirit but you don’t always have to exchange gifts to do so. Consider an act of kindness – babysit for a date night out (or shopping trip) for a friend with young kids, deliver a meal or some homemade cookies, a letter or card, a framed picture of a special event – get creative! Don’t waste money on meaningless gifts that may not even be used.
Draw a line in the sand – stop shopping. Don’t try to keep up with the Joneses. It’s ok to be in a different financial situation than your family or friends and there’s no need to take on debt for pricey presents to meet some social standard we’ve created. (Remember what we said above about returned gifts?)
Find other ways to celebrate. Cut out some of the extras. Dinners out, parties, and new decorations are often forgotten when making the budget. Think outside the box for gatherings instead of spending tons on food, décor, and the perfect party dress. Organize a volunteer day for a local organization or host a craft or cooking day.
Shop Smart. Check out your credit card(s) to see if you have any points/perks that can be used. One year when my husband and I were first married, we used our credit card points to purchase almost all our family’s presents. I am also a big fan of couponing (and wish I did it better than I do). Check out my previous blog on holiday savings to find lists of stores offering military discounts. There are also tons of money-saving apps out there that offer cash-back deals and discounts when shopping online. And of course, always take advantage of free shipping when possible.
I hope this helps you find a happy balance of holiday spirit, smart spending and meaningful gift-giving this year and that you avoid that post-holiday debt and regret that can turn you into the Grinch!
Here’s to happy holidays & a stress-free new year!