Guest Post from Jean Chatzky:
What’s the one time of year that tends to send even the most financially sane people into a bit of tizzy? The holidays. That time period from Thanksgiving to mid December can wreak havoc your wallet—but only if you let it. Luckily, with a little planning you can keep holiday finance stress from getting the better of you.
Create a budget, and stick to it. According to a recent poll by Consumer Reports, 13.5 million Americans are still carrying debt from last winter’s holiday season. You can avoid holiday debt by creating a budget and sticking to it. Start by making a list of the people you need to buy for. Next to each name, put the amount you’d like to spend on that person—don’t forget to take taxes, shipping and wrapping supplies into account, these things add up too. Once you have your total, decide if it makes sense based on the amount of cash you have available to yourself each month—that’s the amount you have left over after paying for your fixed expenses (transportation, housing, child care, health care, groceries, etc.) If you need some help, check out my holiday budget calculator.
You know that budget you came up with? Cut it. Before you even start shopping, try and cut your budget by 20 percent. This, hopefully, will prevent you from going over your predetermined amount. Say you have 15 people to buy for, cut the amount you planned on spending on them by $10 each. That will lower your total by $150. There are other steps you can take to cut your budget too. Talk with your friends about doing a gift exchange in lieu of buying for each individual person. If you’re someone who spends a bundle sending out holiday cards, consider e-cards instead. If you typically send a lot of cards out, the money you save on postage can really add up.
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Start saving now. With a few weeks until the gift-giving season kicks in, there’s definitely ample time to build up a holiday fund. Skip on the extras over the course of the next few weeks. The lattes, the restaurant meals, the trips to the movies; cutting back on these things can really add up.
Dig out those gift cards. If you’re like me, you’ve amassed more than a few gift cards from one occasion or another. Round them up and use them in place of cash or credit when you’re shopping for holiday gifts.
Slow and steady shopping. Get a head start on your shopping and avoid the rush that comes along with waiting until the last minute. When you’re shopping under pressure, you’re more likely to spend carelessly. Waiting until the last minute to buy can also drive your shipping costs up too. Mail things out in advance to avoid costly express mail options.
You can read more from Jean on her website, www.jeanchatzky.com