The new year is just around the corner, and we’d all like to start out the year on the right foot. The problem for many of us is that Christmas comes first, and often our holiday spending breaks our budget before it’s even officially in place. A popular strategy for Christmas spending has become making purchases that can’t be paid for at the time of purchase, paying for them with a credit card and then paying for them later, with interest and possible late charges. While this may enable holiday spending, it is not an effective overall strategy for financial stability. A better approach is to create a holiday budget that reflects the money available for spending and stick to it.
Start with a Realistic Holiday Budget
The first step in making sure you stick to your budget is putting together a budget that realistically reflects your needs, goals, and values. Consider all the things you need to do as well as the things that you enjoy doing during the holiday season. Then look at how much money you have available to spend and decide how to allocate it. If you are reasonable in your budget items and how much they will cost, it will be easier to abide by it.
Track Everything, Including the Little Stuff
Creating a budget does no good if that is all you do with it. A budget is only as good as your adherence to it. To know whether you are sticking to your budget, you have to track all your spending. Additionally, the better you are at tracking every single expense, the closer you will stay to your spending plan. From gifts to food to travel expenses, make sure you account for all of it. This allows you to keep a current picture of how much you’ve spent and how much you still have to spend.
Use Your Debit Card
Credit cards make overspending far too easy. If you really want to avoid overspending, try to stay away from putting it on credit. This may be harder this year since some stores are not accepting cash in the pandemic. If you can’t use cash to make purchases, the next best choice is to use your debit card. Although this may feel the same as using a credit card, it is different because the money comes out of your account immediately. Unlike a credit card, you need to have the money in order to spend it using a debit card.
Don’t Make Impulse Purchases
Another habit that will help you stick to your budget is to avoid impulse purchases. Consider each purchase carefully and don’t allow yourself to be taken in by last-minute add-ons or unplanned diversions from your budget. Keep your list with you whenever you are shopping and don’t buy anything that is not on it.
Remember What’s Important
Finally, keep in mind what is really important to you at the holidays. Most people agree that what they truly value the most cannot be purchased at all. Remembering what you truly care about will help you say no to spending on the less valuable components of Christmas. By doing that, you give yourself and your family the gift of entering the new year without the burden of debt. That is a gift that is sure to keep on giving all year long! And if you really want to get a head start on next year, you can start to proactively plan by opening a Christmas Club account. Talk to our friendly Federated Bank staff about how to get started!
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