1. Get a baseline for where you are financially. Most of us spend a lot more money during the winter holidays than we do during any other season of the year. We may have increased travel costs and higher grocery bills along with more costs related to decorations and gifts. However, unlike previous years, 2020 had been quite different.
The coronavirus pandemic has changed our lives in numerous ways and may have drastically changed our financial outlook. While some young professionals have saved lots of money from decreased entertainment costs or travel expenses, other young professionals might have experienced a salary decrease that may have put a huge strain on their finances. Regardless of which experience you may have had, it’s critical to get a baseline for where you are financially so you know how much money you can afford to spend during this holiday season.
2. Have spending limits for different costs. After examining your income and budget for the remainder of the year, it’s important to make a plan for how much you can afford to spend during the holiday season. Many of us have desires to bless those we love with elaborate gifts this holiday season, but before we overspend, it might be wise to make a spending plan.
When I make my spending plan, I have categories of expenses and an estimate of how much I plan to spend on each thing. I set a certain amount for travel, decorations, gifts, food, etc. That way, when I’m shopping or thinking of gifts to purchase, I have a set limit in mind of how much I can spend. It’s one of the most effective ways I attempt to keep my spending in check.
3. Set expectations with yourself and others. Once you see where you are financially and come up with spending limits, it’s important to set expectations with yourself and others. If you know that money is tight and you don’t plan to decorate your home as much as you have in years past, then be sure to let your family know so that everyone is on the same page.
If you can’t spend quite as much money on gifts for your loved ones, then let them know in advance and think of other ways show them how much you care. If the pandemic has precluded you from traveling to see your family like you normally would, then be sure to find other ways to show your appreciation.
Priceless Advice for the Holiday Season
This is one of my favorite times of the year. Thanksgiving dinner with my family, cool air that calls for cute winter clothes, and holiday festivities that invoke the spirit of love and positivity. As we embark on this season, inevitable holiday sales may tempt us more than we can imagine. In order to deal with this temptation and stay within our budgets, we may need a little motivation to help us practice self-control. Here are a few of my favorite money quotes for the holiday season:
“No amount of money or success can take the place of time spent with family.” – I love this quote because it reminds me of what’s most important. In my quest to find the perfect holiday gift, advance in my career, and make the most lucrative investments I can, I am reminded that it’s quality time with my family that matters the most. This quote also gives me permission to take a day off from writing articles or put my phone down for a couple hours to enjoy a holiday movie, have a large family meal, or bond with my brothers over a football game.
“If you want your children to turn out well, spend twice as much time with them and half as much money.” Abigail Van Buren coined these words and although I’ve never met her and don’t have children, this quote still resonates with me. When I reflect on my childhood and the holiday season, I have so many fond memories. Not because my father bought us the most expensive gifts or because we took the most elaborate vacations, but because we spent plenty of time together. My brothers and I went on to become the Vice President of a large corporation, a financial analyst, and a medical doctor, respectively, because of the life lessons and shared support we gave to one another. Whenever I’m stressed about spending money on gifts, I remind myself that what I lack in money I can make up for in quality time.
“Don’t save what left after spending, but spend what’s left after saving.” This Warren Buffet quote helps me keep my priorities straight, especially during the Christmas season. Black Friday is quickly approaching and I’m always tempted to spend much more than I had planned. When I was a young graduate student living in DC I’d often purchase items “on sale,” then spend the rest of the month praying that I had enough money to cover my remaining expenses. Fast forward to my current life as a doctor, and I’m definitely doing things differently. I have money in certain accounts reserved for bills. I also have money in a “holiday account” through which I saved money during the year so that the gifts I plan to purchase don’t dismantle my financial goals. I’ve learned to make sure my bills are paid, save a certain amount each month, and only spend what’s leftover.
“We make a living by what we get. We make a life by what we give.” This Winston Churchill quote is something I try to remember throughout the year, especially during the holiday season. While I have several financial goals, money alone does not bring happiness and meaning to life. Instead, it’s the spirit of generosity and how we seek to positively influence the lives of those around us. Rather than only thinking of myself and my family, I try to remember those in need and give to other charities and organizations as well.
Tell me, what are some of your favorite money quotes for the holiday season?
How I Prepare for Holiday Spending (and avoid credit card debt)
Now that the weather has started to cool and fall is almost over, the holiday season will be here before we realize it. While the winter holidays can be a joyful time full of new memories with loved ones, it can also be a source of stress and financial dismay. Many of us spend more money during the holiday season than other times of the year and it is this increase in spending that has the potential to negate all the progress we’ve made in previous months. In order to avoid credit card debt and maintain my financial goals I prepped for the holiday season by doing 4 things:
1. Look at how much money I spent in previous years. If I’m being completely honest, this is one of the first years I’ve gotten the courage to actually make and stick to a budget. In previous years I’d just buy what I felt I needed or wanted at the time and charge the extra on my credit card. Clearly this isn’t a winning strategy for financial success. In order to keep myself from making the same mistakes, I first needed to examine my spending. I looked back at old bank statements to see exactly how much I spent on gifts, travel, etc. Having a starting point for how much I spent last year helps me as I start thinking of areas where I can cut back and potentially save money this year.
2. Estimate how much money I will spend this year. Once I have a starting point, I can then group my spending by category and anticipate how much I plan to spend this year. For example, last year I spent Christmas in Florida and had to factor in the cost of travel. This year I’m staying in my current city of Atlanta, so I know I’ll save some money this year on transportation. Last year I bought gifts for everyone in my immediate family and for a few cousins. This year I plan to do the same thing but may alter the amount I spend on each gift. As I continue to go through various categories of holiday spending (travel, decorations, gifts, food, clothes) I can determine a minimum and maximum amount I anticipate spending this year.
3. Create a savings account for holiday spending. Once I determine the max amount I plan to spend, I can then start planning accordingly. In previous years, I would run low on cash and be forced to buy things on credit. This year, I plan to avoid getting into debt by having saved up money ahead of time. About 4 months ago I started putting aside money into a “holiday spending savings account.” Since I know I’d be tempted to spend it on other things, I had the money automatically withdrawn from my main checking account so that I wouldn’t notice it was gone. I now have a nice little “nest egg” of money I can spend during the holidays without feeling guilty. It’s not a large sum, but it’s enough to keep me from racking up debt this holiday season.
4. Decide to stick to my budget and refuse to buy things on credit. As most financial gurus will attest: our financial status tends to be directly correlated to our habits. In order to put myself in a better position financially, I needed to alter my behavior and mindset around money. Instead of looking at credit cards as another way to access money and purchase things I can’t afford, I now view them as a monthly bill that must be completely paid off every 30 days. In other words, I try to not charge things on my credit card that I can’t afford to also pay for in cash. This shift in mindset has prevented me from accumulating credit card debt and helped me better prepare for holiday expenses.
Tell me, what ways do you prepare for the holiday season? What things do you do to minimize/avoid credit card debt during the holidays?