Holiday Spending, Setting Limits & Next Year.
Updated: Dec 9, 2021
The Holidays are a time to be with loved ones, reflect upon the year’s past, and give from the heart... Well, the wallet!
But how far are individuals willing to go when it comes to buying holidays gifts? Many Americans have dug quite the whole to get that perfect gift last year, and are still trying to get out of it. A recent survey revealed in NerdWallet’s Holiday Shopping Report found 29% of individuals who purchased holiday gifts on a credit card in 2020 still haven’t paid off their balances, which is comprised of 35 million Americans!
So here are a few tips to plan out holiday spending, so you’re still not in a hole, or deeper into that hole next December.
Like anything else, you need to put together a plan.
#1 Make a list of who you are going to purchase gifts for, and how much. Make a list of who you’ll buy for. Write down a spending limit for each person. Yes, the amounts can be different for each person, and be reasonable when planning out those amounts. Research and list gift ideas that fall within those spend limits and remain disciplined!
#2 It’s not all about the gifts, what about the food and beverages! Too often we give so much attention to the gift buying that we overlook the fact that we will host holiday events, go to holiday parties, travel to family, and bring a food or beverages to the places we’re going. So plan out what you’ll spend on hospitality for your guests. How much will it cost to fly, take a train, a ferry, or drive to see family. Are you bringing a desert, beverages, a side dish or appetizer? How about those yummy chocolates and candies, those cost money too!
#3 Where’s the money coming from? Add up the spend limit for gifts, then add in the costs for food and travel. Next, check and see if you have this amount of money available in your bank accounts. If you do, great! You won’t incur credit card debt. If you don’t, get the credit card out or go back and rework your plan. If you are going to use the charge card, start to think about how you’ll pay off the debt before you get to next year’s holiday. Think about what monthly payment you can commit to starting in January. Divide the balance going on credit cards over twelve months, does that payment amount fit into your monthly budget to make as a payment? If not, it’s time to rethink your plan.
#4 Setting a financial goal for the new year. Setting a financial goal is just like any other goal. It needs to be specific and defined. Getting out of debt, or saving more money isn’t a financial goal. Stating the amount of debt to pay off, or savings to save up, and the time-frame you want to do it within is a financial goal. A financial goal needs to be specific and defined so you can track and evaluate progress. The beginning of the year is often the time of year individuals rely on tax-refunds to pay off debts or increase savings (let me remind you a tax-refund is an overpayment of taxes to the government). So while you can receive an lump sum of money during the first quarter of the year that can be applied toward debt or savings, the goal doesn’t end with a tax-refund. Planning takes time and work. Get organized! Go through spending and understand where your money. is going each month. Know how much, or if any money is left at the end of the month. Commit to a monthly plan where you’ll consistently save, or pay extra toward debt each month.