Don’t Bust Your Personal Budget During the Holidays
The holiday season should be a happy time, but many people find the holidays less enjoyable and more stressful. Much of that stress is financial.
Last year, a survey by LendingTree found 61% of Americans dread the holiday season because of how much it costs. Three out of four parents stress about spending on gifts for their children. One in four people will go into debt, and one in five are still paying bills for the previous year’s present.
It doesn’t have to be this way. What it takes to survive the holidays with your budget intact is some budget planning and some emotional maturity. We all want to make the holidays special for our loved ones, but spending ourselves into debt can spoil the season for everyone.
Here are some tips to help you keep your holiday spending in check this year:
Set a gift-giving budget. Before you even think about who’s getting what, determine how much you can really afford to spend on gifts. You shouldn’t have to raid your savings account or run up credit card debt to pay for presents. All of your gift buying should come from your disposable income. If that breaks your budget, consider spending less this year.
Make a list—and stick to it. After you set a budget for gift giving, draft a shopping list that stays within that amount. Note on your list how much you want to spend on each gift, so you can keep track of your spending. Also, don’t stray from your list—extra spending is a quick way to dig yourself into a financial hole.
Use cash as much as possible. It’s too easy to get carried away when you shop with credit cards. One trick to keeping your spending in check is to put all the money you plan to spend on presents in an envelope. As you make purchases, you can keep close tabs on your spending by seeing how much money is left in the envelope.
Don’t last-minute shop. One way to spend yourself into trouble is to do all your gift buying in a hurry at the last minute. That’s when you’re more likely to go on a spending spree. Planning your purchases ahead of time can help you avoid the rush and keep your spending within your pre-determined limit.
Give with a purpose. Gift-giving shouldn’t be about overwhelming the special people in your life. Also, you shouldn’t try to impress your friends and family by showing off how much you spend. Instead, pick presents thoughtfully with a unique purpose in mind. Ultimately, gift-giving is about showing appreciation to the special people in your life. If they’re special to you, it shouldn’t matter how much you spend.
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This material was prepared by LPL Financial.
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