Most of us welcome the holidays with open arms as they give us many reasons to smile. We delight in the carols, the scents, the spirit of giving, and the beautiful things the holidays bring.
What we aren’t fond of is the long list of expenses that come with it – travel, holiday gatherings, and let’s not forget the gifts. Don’t let the spending hike take a toll on your finances.
Now is the time to create a saving plan and make arrangements to stay on track and avoid overspending.
Determining what you can afford to spend this holiday season is likely not as complicated as we think.
Start by calculating your income. Then look at previous months to predict future monthly expenses. Deduct your projected expenses from your income to see what remains.
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You may set these “leftover” funds aside for holiday expenses, but savings shouldn’t be limited to what remains. Make it a point to modify projected expenses as you see fit when creating your spending and saving plan.
It’s best to review last year’s financial statements before working on your holiday budget. Knowing what was spent will give you an idea of what you can expect to spend.
Establish your savings goal then break it down into smaller weekly or daily goals to keep yourself on track.
Setting a goal is just step one. Next is thinking about the approach that will help you achieve your goal. The saving process can be very simple with the right strategy.
One option is to use a separate savings account for the holidays. This way you know what the funds should be used for at all times. In doing this, you also give your account purpose. It’s not just an account that has extra funds that may be withdrawn at any time.
A second suggestion is to make saving automatic. Modify your direct deposit to have a portion of your check redirected or set-up an automatic transfer between your accounts. You’ll know it’s getting done and you won’t have to do a single thing once established.
Many of us like to use our credit cards to buy now and pay later while taking advantage of perks like cash-back and zero fraud liability. If you do this and pay your balances off in full each month, that’s great. But it can be a slippery slope if you’re not careful and don’t have a plan.
With all the holiday and day-to-day expenses, it’s easy to swipe away without knowing what’s been spent to date. Failing to keep track and to stick to the plan could mean acquiring more debt and having to pay interest on holiday purchases.
Use cash, write things down, or use personal finance apps like myFinance to keep up with expenses. Apps like this download information from various accounts so you are able to see most of your financial accounts in one place. How great is that?