Tips for Holiday Budgeting
Lots of people take it as a given that after a holiday season of gift-giving and entertaining, they’ll start the new year in the red. But a happier scenario is just a few common sense guidelines away. Here’s how you can start.
Draw up a budget
To avoid spending money you don’t have, the first step is to create a holiday spending budget of how much you can realistically spend and pay without racking up credit card debt. Then organize your plan of attack. List everyone you plan to give to and jot down possible gift ideas and price ranges for each one. Factor in your other seasonal expenses, such as decorations, party supplies and special holiday foods. Add it all up, and adjust the ballpark amount you expect to pay for each item until the total equals the budget amount you started with. Finally, stick to your plan. To avoid impulse purchases, consult this list while shopping and immediately subtract money spent from your original limit. If you go over your budgeted expense on one thing, adjust how much is available for the other items on your list.
After you’ve located the perfect gifts, take a moment to make sure you’ve also found the best prices. Before checking out, review offers from other retailers online — your smartphone can provide quick comparisons. Keep in mind that some stores match competitors’ prices, so an extra trip may not be necessary if you spot a better deal online.
Time your purchases
If you have your heart set on item you found online but it’s just too expensive, it may be time for Plan B. Some sites allow you to set up price alerts that notify you if the price dips to whatever amount you’ve designated. You can find “beat the holiday rush” type sales popping up in lots of places.
If your budget won’t stretch
If it turns out you simply don’t have enough available cash, there are still a couple of options. You can look for a low-interest credit card or a personal loan offered by a financial institution like Cornerstone Financial Credit Union. Either way, you’ll generally get a more favorable deal at a member-owned, not-for-profit credit union than at a traditional bank, which has to return profits to its shareholders. The national average interest rates for both credit cards and unsecured personal loans are about a percentage point lower at credit unions than at traditional banks, according to the National Credit Union Administration, the federal agency that supervises credit unions.
The best way to overcome the post-holiday financial blues is by maintaining control of your spending. While those impulse buys might be tempting, keep in mind how much better you’ll feel about your financial health if you can remain realistic about what you can afford.
Peter Lewis, NerdWallet
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