For many people, one of the most dreaded things about the holiday season is not the fear of being a Scrooge. It’s just the reverse—the temptation to overspend. It’s easy to think, just one more toy for the little ones, or an extra pair of gloves, or the perfect earrings…and somehow during the holiday whirl we load up a bucket of debt. When the credit card bills start arriving in January, the last of the holiday happiness is officially doused, and it may feel like Scrooge got off easy by just having a few otherworldly visitations.
Holiday debt is much easier to get into than out of and can affect your finances through the first quarter of the year, or even longer. The average American household spends over $800 each holiday season on presents alone, and when you add in decorations, entertaining costs, travel, shipping, extra food and drink, and all of the other extras associated with this season, it’s easy to see how debt can creep in. The good news is that you have the power to plan for a perfectly budgeted holiday season.
Here are five tips to prepare financially for the holidays:
1. Find a few places to cut back on spending and add your savings to your holiday fund. Everyone has someplace they can trim a bit—maybe it’s dining out less, cutting back on entertainment, or serving coffee and dessert at some of your holiday parties instead of providing a full dinner.
2. Commit to a cash-only Christmas. Don’t use credit cards for holiday spending. If you’re tempted to overspend, limit shopping times to just a few days during the season.
3. Plan a holiday checklist of tasks to accomplish and purchases to make, and keep your lists in your planner so they’re easy to access. On your gift list, make a note of gifts you purchase so you can avoid doubling up on gifts or forgetting some until the last minute.
4. Establish reasonable expectations in your children. Instead of asking for a long wish list, ask children to focus on just one or two things they’d like most.
5. Find a few fun activities you can do with family and friends this holiday season that don’t involve spending money. Attend a holiday concert, drive around to see lights, make homemade ornaments, or find a way to serve in your community. Having a few free (or low cost) activities scheduled into your calendar is one great way to stretch the budget this month.
As you begin the holiday season, remind yourself that spending money is not the only way to show love, friendship, or appreciation. Preparing a solid holiday budget and sticking with it will see you through the season and into a cheerful January free of credit card regret. And that’s something even Dickens would approve of.