Here they come…the holidays seem to be approaching faster and faster each year.  I blame most of the speed in which they approach on retail stores and marketing. Heck, Christmas decor is out at Hobby Lobby and Walmart even before September is over. Why is that? Retail stores, whether online or in person, want to you, the consumer, to shop early and save money, right? Well, they want you to spend money at least and feel like you’re saving money.  But are you really saving money?  Most people aren’t, since they tend to buy and buy and buy some more.  Don’t get me wrong, buying for others and enjoying their smiling faces and the thrill of giving can euphoric, but if you haven’t planned and budgeted for your holiday spending, you can actually be digging yourself into a hole.

Here are five tips that you can use now to start savings for Christmas and the holidays without going into debt:

  1. Set a spending limit – it can be a limit you set either by per person or per occasion. Either way you need to thoroughly think through all the people on your list and all the gatherings you plan to attend such as:
    1. People – family, friends, relatives, coworkers, teachers, neighbors, trashman, hairstylist, yardman, pool man, children’s friends, etc.
    2. Occasions – family gatherings, meals and parties, office and church parties and pot lucks, mid-year graduations, holiday travel, etc.

2. Open a separate savings account – have a separate savings account at your bank or credit union that is designated to receive contributions and is only to be used to pay for these annual expenses. Many institutions even have Christmas or holiday club accounts that incentivize you to save throughout the year by offering higher interest rates or by rewarding you with an extra deposit from the institution. Be sure to read all the details of the special account if you find one you like as there might be penalties for making withdrawals before the holiday season.

3. Make regular contributions from each paycheck – once you know how much you want to spend over the entire holiday season, the next step is to do a little math and start saving. First divide the total spending limit by the number of paychecks you received. If you are paid every two weeks, then divide by 26. If you’re paid twice a month, then divide by 24. If you’re paid every week, then divide by 52. The answer to your division problem is how much you should put in your designated savings account each pay period.

    1. Example – Total spending limit = $3,000. Number of paychecks = 24.
      1. $3,000 / 24 = $125
      2. $125 per pay check should be transferred into the designated savings account each pay period

4. Keep a list – if you have set your spending limit per person, then keep a list of each person’s name and next to it, write down what you bought and how much it cost. Keep a running total, so that once you hit your spending limit, you know you are finished with that person. Also, be sure to keep a running total of all people to see the overall spending which will reflect how much you have left in your holiday budget to spend. If your spending limit was by occasion, then keep a list of the occasions and a running total just like in the per person model.

5. Watch for sales and use coupons – there is no shame in saving money and getting good deals while finding that perfect gift or making your occasion something special to remember. Look for store adds and coupons on their website. Use RetailMeNot to find instore and online coupons. Take advantage of Groupons. Price compare online before heading out to the stores.

Managing cashflow during the holidays and Christmas is important to starting the next year off on the right foot, so as not to feel buried under large sums of debt and feeling remorse for spending too much.  No matter the time of year, cash management can help reduce stress and keep your finances under control which can ultimately lead to financial independence and peace of mind.  To learn more and have one of our expert financial planners provide more insight like this, give us a call to book complimentary consultation today!”.

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Be sure and check back next week for more incredibly valuable information. Cheers!


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