The holidays are a dangerous time for budgets. We tend to throw them out the window in the spirit of gift giving. The result is that we mortgage our future well-being in order to buy gifts for others. That doesn’t make any sense at all, but it doesn’t stop us from doing it.
According to MagnifyMoney’s post-holiday debt survey, Americans who took on debt during the holidays did so to the tune of more than $1000 per person. 65.2% of those who took on debt did so unexpectedly, and 77% of that debt was in the form of credit cards or store specific lines of credit. Yikes.
If you managed to charge an unexpected $1000 to buy Christmas presents for friends and family, you either did not plan and budget according to your needs, or simply disregarded your budget altogether. This is a sure fire way to end up feeling miserable and resentful come January when those bills start rolling in.
So how do you avoid getting yourself in that situation? There are a few ways to do it that can certainly help you avoid debt over the holidays. Here are some of them:
- Write a Budget! Seriously. Write out everything you’re going to spend, and plan for what you’ll spend on Christmas gifts. Then, and this is crucial, stick to that plan! Whether you buy for everyone, draw names, or just buy for a few, know what you plan to spend on each person and don’t go over!
- Save Ahead. This advice is largely useless this close to Christmas, but if you plan and save in advance of December, you aren’t as likely to resort to debt to pay what you need to. Very rarely do you get caught by surprise with regard to who you’ll buy for and how much you’ll want to spend. That means there is no excuse not to save little by little through the year if you don’t want to overstretch your finances during the holidays.
- Account for Travel Expenses. When you are writing up your budget for November and December, you might not be thinking about all those additional costs of travel during those months. Will you stay at a hotel while visiting family or friends? How will you get there? Will you have to rent a car or fly? All these things can sneak up on you and throw a wrench in your budget if you haven’t planned for them, and they are all things you should be able to anticipate.
- Meal Plan. One of the areas you are most likely to overspend your budget is in your spending on meals. Whether it is on your grocery bill or because of eating out, the holidays are a time when creating a realistic budget and sticking with it is critical. If you have family over and offer to feed them, you need to account for the increased cost of doing that. If you don’t, you’re likely to overrun your food budget and pretty soon you’re tapping into your gift money to fill the fridge. The result? You put those gifts on a credit card. Planning ahead can save you that headache!