Holiday Spending Made Simple
Podcast Transcription
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Hi everyone, welcome to this episode of PFCU’s Money Talk Podcast. I don’t know about you but I cannot believe that it’s almost October which means it’s almost Halloween which means it’s almost Thanksgiving and then Christmas!
It’s easy to get caught up in the magic of holiday spending. But if you’re relying on credit to make holiday wishes a reality, the magic often falls flat when your bills come due. Take the time now to create a holiday budget and avoid that post-holiday spending hangover. So, I’m going to share a few tips on how you can create a holiday budget.
The first tip is to be realistic. The best thing you can do to curb your holiday spending is to set a realistic but firm budget.
According to the National Retail Federation, most people spend around $1,000 on holiday fun. This amount includes gifts and holiday items, as well as spending on non-gift purchases, like family photos and special outfits for parties. And those things that I didn’t really think about but certainly can fall under that holiday spending category.
However, planning to celebrate the holidays and being able to afford them are two different things. A U.S. News & World Report survey says that an estimated 4 in 10 people plan to go into debt to finance gifts and travel.
The first thing you should do when you go to create your holiday budget is to look at what you spent last year and consider the impact that your spending had on your budget. So, for example, were you paying off credit card bills for months after the holidays? Did you have to skip the family summer vacation because Christmas was too expensive?
Be honest about those trade-offs that you’re making with your current holiday spending. That’s going to strengthen your resolve to actually stick to your budget this year.
Tip #2 is to evaluate individual expenses. So, as you create your budget, look at all of those different expenses and try to be all-encompassing with them. So, think about gifts for immediate family, extended family, friends, neighbors, coworkers. Travel expenses, things like gas, flights, hotels. Food, party supplies, Christmas cards, postage, shipping, gift wrapping supplies, décor for inside your house and outside your house.
Add up what you plan to spend and determine whether or not that spending fits inside your budget. And like I said before, think about things that maybe you didn’t consider part of your holiday spending. Like the family photos if you get holiday pictures taken, if you want to get a dress for your company holiday party. Things like that.
Tip #3 is to adjust your expectations. Choosing an appropriate budget may mean that you need to celebrate in a different way than in the past. And if you do need to celebrate differently, don’t be afraid to have an open conversation with your loved ones. Let them know if you need to opt out of traditional gift exchanges.
Or you can even arrange with family to do gifts of time or service instead of physical gifts. Now I know it might not be as exciting for the younger family members, but I think the older ones may appreciate help with organizing spaces in their homes, sifting through family photos, going and volunteering somewhere. Get creative with it.
And if you spent money on something or someone in the past that doesn’t mean you have to spend that same amount forever, especially if you have to go into debt to do so.
Tip #4, make a list and check it twice.
Getting organized with your gift giving can help you take advantage of holiday sales and get the best prices on items. Keep track of your gift list and your spending. Now I do this on my notes app on my phone but there are actual apps that are made for this, including free ones!
You can also try an app to find the best price on popular items or check prices between a few of your favorite online shopping sites. Honestly, just a few minutes of searching online can save you lots of money.
And if you plan to actually go shopping at the store, set aside a dedicated day for shopping instead of lots of little trips. This is going to save you money on gas and is going to help curb impulse buys.
When you’re finished shopping for the season, stop looking at fliers, email promotions, websites, and in-store sale signs which I know is difficult especially if you’re like me and you get those promotional emails all of the time. But that way you’re not going to be tempted to buy whatever amazing deal pops up next.
Tip #5, cash out rewards. If you use a credit card with rewards points or cash back, the holidays are a great time to put those perks to good use.
This feels like “free money” that you can use to purchase gifts, pay for travel, and more. Your card may even offer additional rewards or cash-back bonuses for spending at certain stores or categories. If this aligns with your purchases that you’re already planning to make, that’s important, the purchases that you were already planning to make, then why not take advantage of it?
If you’re in the market for a new rewards credit card, the holidays can be an ideal time to sign up. And many rewards cards come with bonuses for hitting a certain spending amount in a designated time period. But remember, while higher holiday spending can help you hit bonuses, only spend what you can reliably pay off before interest hits. Spending money that you can’t afford in order to get the rewards isn’t a bargain in the end.
And lastly, tip #6 is to plan for next year.
If you’re tired of feeling the holiday pinch, start saving for the next holiday season early. You will thank yourself later.
Break your targeted budget into doable chunks, whether that’s a daily, weekly, or monthly amount. So, if you can find $25 or $50 in your monthly budget, that’s going to be a lot easier than trying to find $300 or $600 when the holidays roll around.
And even if you only plan to save half of the amount, you’re still doing your future self a favor.
And I have talked about this before, but automating the process to make it even easier is going to help you save. Open a savings account just for holiday spending and set up recurring transfers that are going to help you hit your target. Also check into a Christmas Club account- you can put your savings for the holidays in this account and these funds are automatically transferred to a savings account of your choice in October here at PFCU.
I hope these 6 tips help you avoid that holiday spending hangover. And remember, it’s never too early to be prepared. Thanks for listening everyone, see you next time!
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