By Evan Fischer
There’s no denying that most people go a little crazy with the spending when the holidays roll around. Not only is there an emotional component involved (you want to ensure that your family and friends know how much you care, and you show it by purchasing pricy gifts and throwing lavish feasts), but you also have to contend with the marketing push aimed at separating you from your hard-earned money. With all the advertising and sales surrounding this consumer holiday it’s no wonder most people reach the New Year racked with credit card debt that will take them months to pay off. But there is a simple solution. By setting up a comprehensive budget for holiday spending you can make your life easier and come out of the holiday season debt-free for a change. Here are a few tips and tricks to help you create (and stick to) your budget.
The first thing you should do is determine an overall amount you can spend, whether it’s $100, $500, or $5,000. Everyone will have a different limit, but you’ll need to take your financial situation into account and set yourself a number that you will not exceed. Then you need to make a list of everyone you plan to get gifts for. This could include immediate family, extended family, friends, coworkers, and even people who provide valuable services for you (like your children’s teachers, a housekeeper or gardener, or even your favorite barista). Once you have a complete list you must designate dollar amounts to go with each group.
Basically you’ll create a hierarchy of spending. For immediate family you may want to allocate more funds since you likely want to do the most for your spouse and children. So perhaps you could set aside $50 a gift for each of them (just for example). For other family and close friends you might decide that a $25 gift is good enough. And for coworkers and other fringe people in your life you might dedicate $5-$10 apiece. You’ll have to determine an acceptable amount for each group, but a tiered system like this will help to ensure that you don’t overspend.
The only real problem is that prices vary so widely amongst goods. How do you stop yourself from going over-budget when you find the perfect gift and it exceeds your spending limit? There are a couple of ways. First of all, you can set aside something like 10% of your budget for these occasions. Further, you could opt to spend a little more on one person than another. Or you could take some people off your list. But if your budget is set down to the last penny, you might want to think about alternative gifts.
You could give family and friends prepaid debit cards that they could use at any store and then give smaller gift cards (for a café or juice bar, for example) to coworkers. Or you could donate money to charity in the names of the people on your list. Either way, you’ll stick to your dollar amount exactly and you can avoid the many hassles of holiday shopping. If you want to reduce your holiday stress along with the out-of-control spending that has become a hallmark of the season, you simply have to set yourself a budget and find options that make it easy for you to stick with the program. You might be surprised how much you enjoy the holidays when you remove the worry of overspending and the pressure to find unique gifts for all.
About the Author:
Evan Fischer is a freelance writer for Get Debit where you can find the perfect debit method and apply for a turbo tax card.