It’s that time of year. Temperatures are falling. Scarves might be a permanent part of your wardrobe. Friends and family are coming to town, or maybe you’re the one going back home. Here at LendUp, we share traditions (like decorating stockings); we share recipes (one of my personal comforts is spiced hot cider); and, most importantly, we share laughter. But we also recognize that with the holiday season, we often see an increase in spending.
According to a Gallup poll from November, Americans plan on spending an average of $830 on gifts this season -- a sharp increase from last year’s estimate of $720. For some of us, buying so many gifts could mean less available cash and, possibly, overspending. With that in mind, we thought we’d share some tips for mastering your holiday budget (and beyond).
- Make a budget (for the holidays and post-holidays).Did you make a holiday budget? If you haven’t done all your shopping yet, you still have time! You could even consider using an online holiday budgeting tool to help you plan out your expenses. And what about after the holidays? If you just got a paycheck or holiday bonus, your first instinct may be to use it for gifts and holiday expenses. However, think about how that will affect your budgeting in the months following.
- Make a simple list and check it often.Think about your monthly income. How much goes to the essentials? After you’ve determined that, decide exactly how much you can afford for holiday spending. How much can you spend on each person on your gift-giving list? You may not want to put a price on your friends and family, but, when it comes down to it, it’s your budget. The decisions you make today could help you plan for the rest of the year. For example, if you watch your spending today, that could mean money saved in interest or money you could use for necessities after the holidays. (Check out our course on budgeting basics for more details.)
- Watch out for fees.The holiday season can bring an uptick in two major types of fees: overdraft and credit card fees. Both can take a big bite out of your available cash or savings. To avoid overdraft fees, only withdraw the cash you need for your holiday spending, or keep it in a separate account until you need it. If you’re shopping with a debit card, be sure you know how your bank orders transactions. (To understand how this could put you “in the red,” take a look at this useful comparison.) If you’re using a credit card, keep in mind that experts suggest keeping your total credit utilization below 30 percent. In addition, it’s a good idea to pay off your balance in full at the end of the month; if that’s impossible, make sure you can at least make the minimum payment. You can also take our courses to learn how to get the most out of your credit card.
- Small expenses add up.You may plan for the big-ticket items like a flight home or your holiday dinner, but what about all the little things? Think about ways to cut back on items like wrapping paper (e.g., ordering in advance or using old newspapers). Also, many sites offer free shipping, so whenever possible, have your gifts shipped directly to the recipient instead of shipping them yourself. Even if you’re from California, for example, and you’re visiting family in Washington, sending those gifts ahead of time could save you money on excess airline baggage fees. (Just make them promise not to peek until you arrive!)
- Get some inspiration.You may think you need something today, but will you regret the purchase in January? If you have to think twice, that item may not be as important as your long-term goals. (Need a little inspiration? Check out these quotes from other bloggers and leaders in the financial industry.)
Is there an area of personal finance that you’d like us to cover in a course or Fast Financial Fact? Where do you struggle with managing your finances? We’d like to know! Or are you an organization that’s interested in collaborating? Please get in touch at education(at)lendup(dot)com.