10 Things You Should Do Now to Get Your Finances in Order for the Holidays
In a way, Black Friday has become a sort of ceremonial ribbon cutting for the holiday spending season in America. In reality, the groundwork to spend all that money during November and December can and should be laid during the months leading up to Thanksgiving. To put it succinctly, we should be financially prepared to handle the holidays well in advance of their arrival — because holiday shopping has a way of taking us by surprise and catching us off guard. (See also: How to Avoid Holiday Debt — Starting Now)
We spend more money than we need to (often on things that nobody really wants) simply because we don't have a plan in place for managing our finances during a hectic time of the year. Understandably, we get busy and distracted, sidetracked with all of the travel, work, and family activities.
The good news is that you don't need to leave it all to chance, or to the last minute. Get started now with these steps.
1. First and Foremost: Save for Holiday Shopping
Ideally, this is something you started doing last January, putting away $10 to $15 every week or so for holiday spending. If you're just now starting, simply up the amount. Try $25 to $30 once a week until mid-December. By then you'll have roughly $450, which is significant for many households and certainly for individuals buying for other family members. To help you plan your savings strategy even better, try something like Dave Ramsey's Christmas budgeting tool.
2. Know That Thoughtfulness Is Cheaper
Our tendency to buy gifts at the last minute ends up costing us far more money. Holiday marketing pushes us towards the more expensive items and, unfortunately, they're usually easier to buy. Dad gets new power tools; Mom gets a tablet of some kind; and kids get a new cell phone, computer, or gaming system. Those things are expensive, and despite the fact they're usually enjoyed, you don't always need to spend top dollar on that kind of stuff.
Particularly if you're buying for someone in your family, think about keeping it personal. If you take the time to think about what would mean more to someone, you can often avoid the more expensive, conventional gifts.
3. Pay Off as Much Debt as Possible
It can be difficult to manage holiday spending under ideal financial situations, much less when debt is crowding out your cash flow. Make it a priority to pay down your debts now before the holiday season hits.
4. Tighten Your Budget — Now
The less you spend now, the easier it will be to handle the holiday spending rush when it eventually comes. Consider how much you want to participate in that rush. For example, if you really want to take advantage of Black Friday and do some heavy Christmas shopping in December, avoid store hopping in the months and weeks leading up to those events. Keep your budget tight and make sure you have enough extra cash flow for the budgeting we mentioned in step one.
5. Plan Who You Want to Buy For
Creating a Christmas roster does two things for you. First, it eliminates the risk of impulse buying for people that you weren't initially planning on getting anything for. Second, it gives you a grid by which to divide up the Christmas budget you created in step one. Perhaps you want to spend $75 on each of your children, $50 on your spouse, and so on.
6. Start Buying Gifts Now
If you do some Christmas shopping now and in the months leading up to December, you'll not only avoid some of the inflated holiday prices, but you'll also have less people to shop for during the weeks when the stores are annoyingly busy and overcrowded.
7. Set Aside Some Money for Travel
Putting cash away for travel doesn't mean that it has to cover the entirety of your holiday trip cost. What it should do is offset the cost of fuel, food, and whatever other travel expenses might come up. Try to set aside $30 for every day you plan to be away. It'll be a welcome break for your checking account in the middle of the holiday season.
8. Commit to Not Using a Credit Card
If you've gone through (or committed to going through) step three, don't get back into the habit of using your credit card for the holiday season. It's far too tempting to say, "I'll just use it for Christmas shopping." Use a debit card or cash. If you must use a credit card, treat it as a debit card and pay the balance down quickly. Who wants to start the new year with that monkey on their back?
9. Track Your Expenses
Use a program like Mint to track your spending and see where your money is going now, to help you budget and save, and during the holiday season to help you stay on budget.
10. Buy Decorations Now (If You Need Them)
The secret here is that you can get Thanksgiving and Christmas decorations almost year round. It's just that most people don't start to look for them until the holidays are imminent. That usually means you'll pay more when the season is close. If you can plan ahead and restock your decorations in June or July (the very end of December/start of January is even better), you'll save some money and time in the long run.
The Holidays Are Coming
A little forethought and planning now can help you avoid most of the annual holiday stress — and financial strain. It's simply a matter of being intentional about your finances with an eye to the future.
How are you getting your finances in order leading up to the holiday season? Let me know in the comments below.