8 steps to financially prepare for the holidays
The season of giving can influence our preferences for excess, whether it's a second helping of dessert or spending money we don't necessarily have. There's nothing Scrooge-like about staying financially smart throughout the holidays - consider it a gift to yourself. And when it comes to gifts like these, the more, the merrier, so follow these eight steps and feel the love.
Determine Travel Expenses - Before you march off on your first holiday shopping expedition, define the other seasonal expenses you have in the pipeline. You probably already have your plane tickets if you're traveling someplace far, but remember to account for car rentals, hotels, meals, etc.
Make a List - Before you begin any holiday shopping mission, it's crucial that you make a list of the people who you are shopping for. If your circle runs wide, consider making two lists; one including the folks for whom you absolutely must buy gifts, and another with names who you'd like to shop for but might fall into the homemade gift category if your budget doesn't stretch so far.
Figure Out an Overall Budget - Put on your thinking cap and punch some numbers to figure out how much you'll have to spend on gifts in total. Don't just estimate your gift budget - setting a firm range like $500-$600 is a fine guideline to follow, but stay away from making broad estimates to remain in control of your shopping budget.
Create a Spreadsheet - List everyone's names who will be receiving gifts from you and plug in a price range next to each of them. Update the sheet with the actual cost of the gifts as you purchase them so you know if you're running under or over your total budget. Then, calculate how much you have left to spend before heading out on the next shopping trip.
Get Creative - It's possible that purchasing gifts just doesn't make sense for your financial situation this year. No worries, it's the thought that counts. Tap into your creative side and make homemade gifts for your friends and loved ones. They'll appreciate the gifts just as much, if not more, than store-bought ones. Get inspired by checking out several great homemade gift ideas.
Change Your Habits - Most of us don't have extra money laying around, so if you haven't already changed your habits to come up with holiday shopping money, now is the time. Instead of spending your discretionary income on things like happy hour every week, dinners and lunches out, parking at the closest (but most expensive) garage, cut out where possible so you're able to give thoughtful gifts and take some extra time away from the office.
Be Cautious With Credit Cards - Credit cards aren't harmful if you're able to use them responsibly, but be honest with yourself about whether or not you'll be able to keep holiday spending under control if credit cards are your means of payment. If you don't think you have the ability to keep your spending within budget and won't be able to pay your balances immediately, simply leave your cards at home.
Don't Count on Your Bonus - While you might have a year-end bonus coming your way, there aren't any guarantees that it will actually happen. And for that matter, how much the check will be worth. Figure out your holiday budget by pretending a bonus doesn't exist; if you end up receiving one, you'll come out on top, and if you don't get one this year or it's minimal, you'll still come out on top.
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