Christmas is the most wonderful time of year, and it can also be the most expensive time of year. So many consumers throw their budgets and financial plans to the wayside and take advantage of the holiday sales, planning to pay off the credit charges in January.
The reality is when the holiday shopping season rolls around you could still be paying for last year’s Christmas gifts. According to a poll by Consumer Reports, in October 2010, 13.6 million Americans were still paying for Christmas gifts bought for the 2009 holiday season. That’s a whopping ten months later. The $20 sweater becomes a $23.60 sweater at 18% interest, and your credit score goes down.
Ground your shopping plan in your personal values and get support
Unfortunately, shopping for gifts for family and friends carries a lot of emotional baggage with it which can skew our vision when it comes to sticking to our financial goals during the holiday season. Recognizing the emotions involved and making a plan before starting the shopping can help. Talk to family members and friends. Some may be willing to have an open and honest conversation about setting spending limits or foregoing gifts altogether. If you encounter some resistance, suggest doing something together like making cookies or having breakfast or lunch at your favorite restaurant.
Find a buddy who wants to keep their holiday shopping frugal or at least within reason. Depending on the size of your extended family, you may find having a relative as a frugal buddy and a friend as a frugal buddy gives you more emotional support than simply a friend would. Friends may not understand the subtle nuances of family dynamics, though being outside the drama can give them a clearer perspective on what to do about shopping for family members.
Make a list of people to give to, and then prune it ruthlessly. Don’t put someone on your list just because they’ve given you a gift in the past. Only include people that you truly want to give to. It’s okay not to give a gift to everyone you know. A holiday card with a personal note may be all that you need to do, or even better, make a point of calling someone and focus the conversation on how they’re doing. Your undivided attention is often gift enough.
Decide how much you’re going to spend in total. If you’re sticking to a cash budget, and already have money saved, then bravo, you have your budget. If not, look at your current budget, especially the extras, and fore go these for the next two months to pay for your holiday shopping. Make it a goal to use only cash and not end up paying for Christmas for 10 months.
Set a budget for each person on your list. Make the budget realistic. You would be amazed at how creative you can be with a $5 or $10 budget. I’ll be sharing ideas for gifts under $10 later in the week.
If you decide to make gifts, be realistic about your time. Wait until January to take advantage of sales on supplies and spend 11 months making gifts rather than cramming the gift making into 6 weeks, along with everything else. You’ll be less likely to waste money on supplies.
How do you stay focused on your financial goals during the holidays?
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