It may be hard to think about mistletoe and garland while it’s hot and humid, but now really is the time to start planning for the holidays. Gifts, food and decorations typically add up to about $800 (according to the NRF), and many families will be paying off holiday debt past St. Patrick’s Day!
You should be making a budget and putting money away now so when the holidays arrive you don’t have to put the purchases on your credit cards. And don’t forget- the holiday season is starting earlier and earlier. The sales now start in the fall, and shoppers will take the bait! 40% will start buying gifts before Halloween (according to the National Retail Federation.)
A few tips to help your Christmas list not break the bank
- Build a Budget
A holiday budget should cover all of your extra expenses of the season. That’s more than gifts; don’t forget about travel, decorations, gift wrap, cards and postage. A good place to start is by gathering last year’s receipts and adding them up to get an idea of a realistic total. If you didn’t save last year’s paperwork, you can start from scratch. Use a holiday budget worksheet, and put what you think is realistic for each category. The budget worksheet will not only guide you through this holiday season, but it will be a good start for setting next year’s budget.
- Find the Funds
Now that you have an idea of how much you want to spend, take that total and divide it by five. That’s how much you need to save each month to reach your total. This is the hard part- it’s time to find the areas where you can cut back. The first place to look is meals out – if you can pack a lunch two or three days a week, that can save you about $50 per month. Are there gym memberships you’re not using or magazines subscriptions you’re not reading? Can you cut back on your cable plan, even temporarily? You may want the premium sports channels for football and the World Series in the fall, but you could reduce your rate until then. The truth is just about everyone has areas where we can cut back, but you have look hard and make a commitment.
- Save Smartly
Now that you’re saving money, save it smartly. It may seem easiest to put the money into a savings account you already have – the same account that holds your emergency fund, your vacation savings and your back to school budget. Instead, I recommend opening a separate account dedicated solely to your holiday shopping budget. You may even want to open that account at different bank than you usually use to avoid the temptation to spend the money. Just make sure you research any fees and interest rates that bank may have.
- Track your Totals
Your holiday budget worksheet will be your guide to get you through the entire season. Update it as you go along, and take it with you when you go shopping. Knowing what you want to buy will help you zip through stores more quickly and avoid impulse purchases. Once your list is full or you’ve hit your spending limit – it’s time to leave the mall!
- Start Soon
There’s no reason to wait until December to start your holiday shopping. You can save stress and money by starting soon. Last-minute shoppers estimate they spend about $250 more than the early birds (according to the American Research Group.) By shopping early, you have more time to compare prices and take advantage of sales. Just hang onto your receipts. Most stores have a 90 day return policy in case you find a better deal.
Bonus tips to bring down the costs of the holidays
- Prioritize your gift list. If there are people you aren’t sure whether you should buy gifts for, ask them if they would like to exchange cards this year.
- When in doubt, go for the gift card! They’re great for people who are hard to buy for, and they help you stick to budget.
- And avoid buying gifts for yourself – people spend about of $130 on themselves when they are out shopping for others (according to the NRF). Remember, it’s not in your budget.