It seems that as soon as the Halloween candy and costumes begin showing up in stores we all flip a switch in our heads that puts us in a “need to spend” mode. With only a couple of months to go until the holiday season hits full force, we start thinking about all of the gifts, food and decorations that we need (want) to buy… and the retailers only fuel the fire with a never ending stream of holiday advertising.
The months from October through December account are the most expensive time of the year for most people. We seem to spend more money during these three months than any other time of the year. For my family it is not only spending for the holiday season that starts in October but other events that require spending… October – Wife’s birthday and Halloween, November – Real Estate taxes due and Thanksgiving, December – Our anniversary, my birthday, auto registrations due for three cars, Christmas and our daughter’s birthday, whew… that’s a pretty expensive 4th quarter!
If it were not for some prior planning, the end of the year would be financially devastating for us. But by following a few simple rules and being conscious of our spending throughout the year, we are able to meet our end of the year financial obligations. The following are a few tips to put you in a better position fiscally at the end of the year and how to prepare for the holiday season financially:
Budget – Budget, budget, budget… Make a Budget. Unless you have a money printing press in your basement, you must have a budget! It’s not necessary to have an overly complicated budget that you need an accounting degree and 8 hours a day to work, all you need is a simple and effective way to track how much money you bring in and how much you save and spend. When you know where your money goes, when, what and how much is due, you can be prepared for the upcoming holidays and avoid getting yourself deeper in debt.
Specifically the Holiday Season –
The List – A sure fire answer to how to prepare for the holiday season financially would be to make a list of all of the people to whom you would like to give gifts. Making a list of your intended gift recipients will go a long way to relieving the pressure and anxiety often associated with the holidays. You do not need to have everyone you know on your list, especially if money is tight this year… keep your list to just close friends and family.
What’s the Cost? – Now that you have your list, go through each name and assign a dollar amount representing how much you want to spend. Total it all up and see what you’ve got. Too much money for you to spend? If so, go back through your list making adjustments to the dollar amounts and the number of people on your list if need be, until you get to a figure that you (and your budget) can live with.
Timing – Shop early… I don’t me go to the store at 5 in the morning, start shopping early in the year. Often we have an item in mind that we want to buy someone for the holidays well before the season arrives. If you can make some of your holiday gift buying early, you will likely have more money to spend during the holiday season, not to mention the relief of having a head start on your shopping. Often good deals are available before the official start of the holiday shopping season. There’s that day I avoid at all costs… Black Friday – the day after Thanksgiving, often regarded as the beginning of the Christmas shopping season.
Smart Purchases – Being a smart consumer this world with so many items and services can be somewhat overwhelming. Before you head to the mall, do some research and learn about the particular products and their options that you are considering buying, especially expensive items such as cameras sporting goods, electronics, and computers. The most expensive model is not always the best model. Also avoid buying unnecessary warrantees. Rarely are warrantees worth the added costs and often duplicate the manufacture’s existing warrantee.
Will this be Cash or Credit? – If you’re still dealing with the debt from last year’s holiday season, leave your credit cards at home. Also, if you can’t pay off your credit cards by the next month, don’t use them. Many people find that they are still paying for holiday gifts long after they have been used up or broken. It is just financially irresponsible to purchase holiday gifts on credit and bury yourself deeper in debt. Before you break out the plastic, you should be able to pay off your credit card bill quickly. If you do use credit for holiday shopping, avoid large interest payments by paying off your credit card bill in full.
The holidays are approaching fast, don’t get caught up in the buying frenzy that traps many Americans during the season, with a little planning and a lot of financial discipline, you will be able to show everyone how to prepare for the holiday season financially.