Six Tips To Ease Holiday Financial Stress

Six Tips To Ease Holiday Financial Stress

The holidays can be a wonderful time of the year, full of good times with loved ones and moving acts of generosity and fellowship. They can also, however, be frustrating times on a financial level. Whether it’s gift shopping or the costs of getting together with your closest friends and family, the holidays can put a special strain on your savings. That’s why having a holiday budget is so important. Plan smart, shop smart, and you’ll spend your holidays living smart.

Six things to keep in mind when putting a holiday budget together:

1. Know your expenses. The holidays can be chaotic and unpredictable, but some things stay the same—like rent or mortgage payments, putting gas in your car, and keeping the lights on. Before you start worrying about your holiday spending you need to make sure all your essential expenses and cost of living are taken into account. The key to a good budget is knowing your expenses. To help you to stay on track with your goals use Dave Ramsey’s steps, suggests Dr. Lily Davidov, Rio Salado College’s Faculty Chair for Accounting, Small Business, and Insurance Studies.
    
2. Set a limit. Now that you know what money you have left over that isn’t tied up in self-care and fulfilling obligations, the next step is to understand your spending limit. Between travel expenses, eating at restaurants or springing for fancy ingredients and foods at grocery stores, buying presents, and family outings, there are a lot of ways to spend your money. Davidov suggests that Holiday Gift Card Promotions could be the answer to many gift ideas.
    
3. Prioritize and allocate. Look at your holiday expenses and prioritize them. What things will you spend the most on? What’s most important to you? Once you have that figured out, it helps to allocate your funds, putting them aside in ways that make it harder for you to get tempted to touch those funds before you need them (see our “Saving Tips” section below).
    
4. Track expenses. This is just good financial planning in general. Always, always, always track your expenses. Download an app that will track your holiday goal. Good record keeping will make your holiday season more relaxed. 
    
5. Shop smart. When possible, buy EARLY. Stores can sell out and desirable presents can be hard to come by the closer it gets to the holiday. Take into account shipping delays and increased costs if you’re ordering anything online. Completing your shopping before December will increase your chances of getting to enjoy some holiday sale discounts and receiving your goods before the last-minute holiday spending spree kicks off. Dr. Davidov suggests purchasing Amazon prime; make sure you claim your student discount when you sign up. Amazon Prime will save shipping cost, get your items faster, or if you do not need your order right away, use No-Rush Shipping and earn rewards for future purchases.  
    
6. Be flexible. Unplanned expenses happen, which is why having spending limits is a good idea. You might need an extra cushion if something happens. Sticking to a budget is good, but never let your budget be a straitjacket. There are times where it can be beneficial to deviate from your plan. See if you can utilize reward points from your credit card. One strategy Dr. Davidov suggests is purchasing all your groceries during the year on a credit card. You have money allocated for groceries anyway, pay for groceries with your credit card and pay off your credit immediately. Do not cash points until the end of the year. This method is very effective and gives you more cash for your holiday shopping; however, it requires very high self-discipline, you MUST spend only as much as your budget for groceries and pay off your credit card immediately.  

Saving Tips

A few things to consider when you’re setting money aside for the holidays:

• Buy gift cards: If you shop frequently at certain stores for gifts, consider taking some holiday money and putting it into gift cards. This locks that money in for the purpose of gift shopping and will keep you from spending it elsewhere. 
• Use a piggy bank: It may seem silly, but there are psychological benefits to saving cash inside something you’re reluctant to break. Get a piggy bank - something cute that the mere thought of smashing it would make you wince - and use that to collect change and dollars throughout the year. Like your holiday budget, it pays to track what you put into the piggy bank so you don’t crack it open in November and realize you only squared away $10!
• Sign up for a Christmas club: While they aren’t as common as they used to be, many credit unions and community banks still offer holiday savings accounts. With a Christmas club, you put aside a small amount of money monthly so you’ll have a nice chunk of change set aside to cover holiday expenses. If your bank doesn’t offer a holiday account, you can achieve a similar effect by doing an automatic transfer each month to a savings account.