With all the negative market talk to deal with lately, I thought this week would be a light topic. It’s Christmas in July! Not the actual day of celebration, but some tips for preparing for Christmas and year-end holidays for 2022. Christmas is just over 22 weeks away as of this writing. My gift to you is some advice on how to handle that extra expense especially this year with inflation and the possibility of a looming recession weighing on our minds. Not everyone celebrates Christmas but for a large number of families this is a major holiday and a very big expense. Christmas can be fun, but it puts many folks into a financial tailspin and creates unnecessary stress. So, how do you prepare for the expense in your budget to avoid the tailspin and reduce stress in a year when inflation is up and a recession may be looming?
First of all, don’t wait until December to “find the money” or worse, default to putting all of your charges on a credit card that you can’t afford. Remember, those interest rates are high this year. That’s how we get into a financial tailspin. Here are few ways to tackle Christmas saving and spending.
Consider delaying really large gifts like a car or other item that may require financing. Financing is high right now due the increased Federal funds rate. If you can delay that larger purchase until rates are lower, do so.
Create a separate sub-category in your annual savings budget and save for Christmas like you would for a larger, long-term goal. Set a goal amount of total spend and break it down by weeks or months until Christmas. The sooner you start in the year the easier it will be on you, but you still have almost six months to work on this goal.
Next, determine an amount per person per category. For example, allocate more money per person for your children, another amount per person for extended family and friends that you buy for, and finally, a lower per person amount for those you have to buy for such as service personnel, co-workers, educators, coaches, etc. Don’t forget to include an amount for extras such as shared meals, travel, donations and other non-gift cash expenses. If you always provide the wine or the goose for a family gathering, you have a historical record of what this cost you so be sure to include that expense.
Open a Christmas Club account and banish the credit cards! These accounts are not as common as they used to be, but lots of credit unions still offer Christmas Club or holiday accounts. If an actual Christmas Club account is not available, set up a subaccount for savings and name it Christmas. Credit unions would be happy to help you start an account so check with your credit union to see what they offer and what the terms are for the account. Use your Christmas Club account funds and put those credit cards on ice!
Shop early. When you see something on sale that is perfect for someone, go ahead and buy it. It’s one less person on your list to shop for and it spreads your shopping and spending out over the next several months. Just keep track of who you have bought for so you don’t overspend.
When it comes to credit cards, use the card that gives you something. This is either cashback, miles, or points. Whichever is your best card for a bonus or refund, and hopefully lowest interest rate, is the card to use.
Gifting older friends or relatives? My guess is that you could actually skip the gift and offer to spend time with them. Many older folks value time together more than new socks or another trinket. Thing of things you can do together that are low (or lower) cost such as a lunch, movie, overnight stay, a day in the park, theater… You have lots of low-cost, time together options.
Reduce your overall giving. Seems easy to say, but sometimes a hard reminder is good. Consider reducing the number of folks you buy for, and the number of gifts per recipient. Remember, it’s really about spending time together.
Here are a few summary survival tips:
Set a budget amount and stick to it!
Start early in the year saving weekly or monthly.
Open a Christmas Club account and banish the credit cards.
Avoid Black Friday but shop sales from Labor Day through Christmas.
Take advantage of Cyber Monday for must have items.
Group online items and buy from sites that offer free shipping.
For older recipients, skip the gift and spend time together.
Reduce the number of gifts given.
Finally, buy something for yourself!
You can take the stress, and some of the expense, out of Christmas shopping with a little foresight and planning. As an independent Certified Financial Planner™, I can help you set an appropriate spending goal and layout a plan for Christmas spending that won’t put you into a financial tailspin. Contact me and let’s get started! #talktometuesday #Hireaplanner #Christmas #Christmas2022 #budget #ChristmasClub #CFPPro #budget