Holiday Budgeting Tips

Tue, Nov 27, 2012

Bankruptcy, General Legal Issues

It is easy to get carried away during the holidays. Everyone wants to provide a special day for his or her friends and family. It all adds up to a very expensive time of year.

I hope that you took advantage of some of the recent sales for gifts for your loved ones. Some people went in with a plan, and some did not. Those with a plan probably fared a whole lot better than those who swung by the seat of their pants did. That is the way the entire holiday season can go if you let it.

Ideally, you are not waiting until the holidays come around to start budgeting for them. I hope that you have a budget plan for your everyday life. SmithLaw has written previous posts about good budgeting tools. One example is “Four Resources for Managing Your Money Wisely.” Attorney Christopher D. Smith meets clients every day who have been ruined by debt. Holiday debt, while it provides a good time for all, is just not a good reason to put your family’s future in jeopardy.

So, one of the best ways to prevent holiday debt is by looking at your financial situation often. Make a plan for the entire month, year, and all the way up to your retirement. This sounds overwhelming, but you need to keep both the present and future in mind.

Start by making a list of all of your expenses. Think hard about what you spend each month, as some expenses will surprise you. Keep track of your monthly bills: electricity, cell phone, rent, etc. In addition to those bills are expenses like car registration, oil changes, haircuts, etc. Those need to be budgeted in, even though they occur less frequently. It is tough to pay for these things if your budget does not allow for them, and you will probably just end up charging them. That is a sure way to get into a debt crisis.

Then, there is the fun stuff. Do you get a latte every day? Do you get a manicure twice a month? Do you play golf twice a week? Do you rent four movies a month? These expenses, while small at the time, add up to a lot of money each year. Should you cut out all the fun stuff? No, not at all. If you are facing budgetary problems though, you will need to cut out some of this stuff. Bottom line: budget for monthly bills, yearly bills, and retirement savings–but still make a budget entry for fun.

So where does holiday spending fit into this? It is both necessary and fun. Maybe you will need to cut out a round a golf a week and rent two movies a week to pay for these expenses. You only have so much money to spend. Maybe you figure it is no big deal to spend big one Christmas, because you will make it up next year. And maybe you could. However, what about other unexpected things like medical bills or car repairs? Those expenses need to be worked into your budget also, and will not wait just because you cannot afford them this year. Too many unexpected, and unpaid for, expenses add up to disaster

One of the best ways to save for unexpected expenses, once-a-year expenses, and retirement expenses is by putting enough in savings each month. This is hard to do sometimes. A good way to do it is to have it drawn out of your paycheck without you seeing it or by having it drawn out of your checking account automatically. That is a great way to be sure you do not neglect saving. (Some banks also still offer Christmas savings accounts for those types of expenses.)

Shopping sales is a great way to save. Go in with a plan, it is sure to help. Also make lists, compare prices, and think carefully about how much you really need to give. In addition, do not forget to factor in any travel expenses, meal expenses, or even gift-wrapping. Everything adds up during the holidays.

SmithLaw wishes you a very happy holiday season!

Image: Some rights reserved by SteveNakatani

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