Authored by EMILY PROMISE CFP®, AIF®, APMA®, CRPC®
Do you ever wonder where your money goes? Especially around the holidays? Well, you are not alone. Not only are you spending money on gifts, but the holiday season also comes with a myriad of other expenses that include entertaining, decorations, travel to relatives, holiday cards, mailing of packages, and charitable giving. If you are hoping to avoid the dreaded overspending and exorbitant bills in the new year, come up with a spending budget now that is realistic and one that you can stick to.
Putting together a holiday budget is a lot like preparing a monthly spending budget. Identify how much money you have coming in and where you want to allocate those dollars. Calculate your normal monthly living expenses and earmark what is left to your holiday budget.
Start by listing all the people you would like to purchase a gift for. To keep this cost down, consider homemade gifts that might cost less. Budget for sending out those holiday cards and any decorations you might be purchasing. Think about do-it-yourself decorations. With so many great ideas available on-line nowadays, you can do a lot of things by yourself and save dollars in the process. Make sure to add in any extra entertaining you will do and how much the food and drink will cost. Consider potluck if you are entertaining to help keep within your budget. If you have a favorite charity that you support, include your donation in your overall holiday budget.
Once you put a list together of your expected expenses, if you see that there is not enough money to do the things you would like to do, consider other income streams. Do you have a Christmas Club at your bank that you could stash money into throughout the year? Can you take on a small part-time job to help increase your income stream for those extras? How about selling those unwanted items in your closet for a little extra cash? Try putting aside the money you spend every day on that fancy coffee and earmark it for the holidays? If you are lucky enough to get a year-end bonus, can part of that bonus be used for holiday spending? But a word to the wise, remember to never count on that bonus and spend it before it is in the bank.
Continue to track your expenses daily to make sure you are staying within your budget. Opening up a separate bank account with your allocated holiday budget may help you stay the course. And in today’s mobile world, checking on your balance is as easy as checking your app on your phone on a daily basis to monitor how you are tracking.
Doing a little preparation upfront before you begin spending for the holidays will help you to stay on track and not overspend. And when you stay within your budget, you will thank yourself in January when those bills begin to roll in.
Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other individualized advice we can provide towards your financial well-being.
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