Since the holiday season is a tough time to keep your finances in check, there are a few things you can do to keep your cool during the holiday season, stay out of debt, and actually keep some of your money for yourself. Wouldn’t that be nice?
Shopping: Before you even hit the stores, start with the total dollar amount you want to spend and then work backwards. To make sure you keep within your budget, make a list of who to buy for, what to buy, and check it twice! If you can, stay away from the stores and shop online—there are much fewer temptations. Try and look for online sites that offer free shipping or reduced shipping (on Old Navy’s Web site, shipping is only $5). Don’t forget, it is the thought that counts. Your family and friends don’t expect the most expensive cashmere sweater. However, they do want to know that you thought about them.
Your Credit Cards: While credit cards sure make shopping easier, they can also get you into a lot of trouble during the holidays. If you carry a credit card balance, focus on only using cash for your holiday shopping. Put those credit cards away until further notice. At the same time, continue paying off your debt so you don’t get behind in your debt repayment plan. If you do use your credit card, then bring your checkbook shopping and deduct it from your cash balance. Then write a check to the credit card company as soon as you get home. In addition, balance your checkbook weekly during the holiday season. It will keep you focused on your finances during this hectic time.
Out of the Box Gift Ideas: You can always buy another sweater for your Mom and a pair of socks for your brother, but here are a few gift ideas that are easy on your wallet and will still score you big points at holiday time. How about a mutual fund? Open a mutual fund account for anyone on your list. It might be a great way to introduce your children (or other children), and maybe yourself, to investing. Do you have extra frequent flier miles? Then “buy” a flight for a family member or close friend. While it might not seem like you spent any money, it makes a greatly appreciated gift. You can also buy other items with miles, such as magazine subscriptions and hotel rooms. How about a magazine? A subscription to a magazine is a great idea for a gift. They aren’t that expensive ($12 to $25 per year) and it is the gift that keeps giving all year long.
When January rolls around, you won’t remember all the gifts you bought but you will be relieved you were able to stick to your financial plan. One last thing: don’t forget to buy a gift for yourself. You can open an automatic savings plan, put an extra $100 in your IRA account, or buy a mutual fund. You will thank yourself after the holidays.
Copyright Down-to-Earth Finance LLC 2006
Updated December 7, 2008