Not to freak anyone out (or perhaps you already know?), but Christmas is six weeks away at the time of this writing. For some of you, that just created a stress-induced panic but stay with me here: a little preparation can go a long way and this is absolutely no different.
End of the year holidays are great. The food, the get togethers, the food, the office parties, the food, the gift giving, and obviously, the food (I like food). There are probably a few folks out there that celebrate these holidays (or wish they could) nearly every month, but for most of us, things like Thanksgiving, Christmas, Hanukkah, or Kwanza are really once a year ordeals. That means these are events normally outside the standard monthly budget (if you don’t have one of those, let’s talk — budgets save lives). Just being honest here, folks: end of the year celebrations can get expensive quickly. Over the last two years, Americans have spend nearly $1,000 hard-earned dollars on Christmas celebrations alone1. I can’t say for you, but an extra $1,000 expense in a single month’s budget is going to hurt — a lot. Or, for some, it may come from savings; for others, it might hit the ‘ole credit-card and you could be paying for Christmas until that tax refund comes in the spring.
None of those options sound great to me, and I hope your brain is telling you the same thing. There has to be a better way, right? Well, that’s where preparation comes in. I know it’s November so maybe this post is about 4 weeks too late, but better late than never when it comes to finance prep. So here’s the deal: we want to break up that $1,000 expense (or whatever that number is for you) so that it doesn’t put a crater in December’s budget, the savings account doesn’t take a hit, and obviously, we don’t go into debt. It’s gonna be a cash-flowed Christmas, everyone! So let’s get started.
- Step 1: we need to figure out how much we plan to spend (*cough cough* budget *cough*) on these holiday events. There’s so much extra in these months it might be helpful to break them down into categories such as Thanksgiving: Food, Thanksgiving: Travel then Christmas: Gifts, Christmas: Travel, etc.
- Step 2: Time to estimate how much you are spending per category. Yes, that means listing out for whom you are getting gifts (hmmm I wonder where that idea could come from? A jolly old gentlemen in a bright red suit, perhaps?), and the associated planned amount. Total up those amounts at the end and you have your number for that category. Easy-peasy. Do that for all holiday categories you made, and you’ve got your overall goal.
- Step 3: Break up the overall goal from Step 2 into sizable amounts across November and December. Maybe it’s 50/50, maybe November can handle 25% of the projected amount and that’s enough relief for December to be just fine. Use whatever split works best for your and your situation.
- Step 4: Execute. Track your spending (the EveryDollar budgeting app is phenomenal for this), make adjustments when you need to. Call me crazy, but I’m willing to guess you’ll end up spending way less than you would have had without planning because you are paying attention. Which means you’re looking for great deals, you’re getting great deals, and you’re saving some hard-earned cash, too. Win-win-win (triple win, nice).
A couple other things to consider is how the festivities will impact your regular budget line items. For example, if you are tracking Thanksgiving food expenses explicitly, it’s very possible your normal grocery line item isn’t the usual amount; it may even be lower, especially if you plan to spend time away with family for a handful of days. Additionally, if you are tracking Thanksgiving travel separately, your budget item for regular things like fuel for your car could be different.
There you have it, folks. It is a great time of the year and a busy time of the year. Don’t let the lack of preparation cause more stress around the holidays and distract from the celebrations around you.
1: https://www.investopedia.com/financial-edge/1112/average-cost-of-an-american-christmas.aspx