With the holidays around the corner, failing to plan for the inevitable impact to your budget will place you in a hole that will be difficult to climb out of as the calendar flips to January. Between excess food, unexpected gifts and weekend dinner parties, the holidays have a way of eating into our savings and causing undue stress in what would normally be a happy time of year.
Personally, I start planning for the holidays in January. My potential holiday spending is rolled into my overall budget for the coming year. I take into account how much we’ll need and make sure this amount is available as the season approaches. This works for me; however, the same method won’t work for everyone. Regardless of how you approach the season, there are a few easy steps you can take to make sure you’re ready for whatever comes your way.
Plan Ahead, Then Add 20%
I view our holiday spending as a line item in a yearly budget of expenses for the upcoming year. These expenses include house repairs, vacation(s), weekend getaways and miscellaneous items. There’s no getting around the fact that money will need to be spent in the months of November and December and perhaps even in the months leading up to it.
Whatever I think will be spent, there’s almost always one or more expenses that I didn’t originally account for. To counter this, I add 20% on top of whatever it is I think we’ll need to successfully make it through the season unscathed. This practice alleviates any future worry and ensures there’s cash on hand to cover anything unexpected.
Work a Side Job
Performing a quick search on the internet, having a side job is one of the first things that pops up to make extra money. There’s a reason for that. Having a side gig can provide you with the cash you need to not only get ahead but bump you to the next level of financial success. Having hundreds of extra dollars in your checking account, coupled with the right mindset and spending habits, can elevate you from being cash poor and in debt to flush with cash and having zero debt.
For anyone who thinks a side job is beneath them, I would challenge you to ask yourself 3 simple questions:
- Do I have enough in savings to cover 6 months of expenses?
- Am I carrying more than $10K in credit card debt?
- Can I write a check today to pay off all of my debt and still have money left over?
If your answer to all 3 of these questions is “no,” a side job is certainly not going to hinder you from reaching your financial goals. It’s also going to provide you with the necessary cash to be healthy, happy and prosperous during the holidays.
Be True To Yourself
There appears to be an embarrassment factor as it relates to what we spend and what we can afford. Rather than buying a less expensive item that fits into our budget, we’ll opt for the more expensive luxury item because we don’t want anyone to think we’re either cheap or can’t afford it. A dose of reality comes into play here.
Before swiping that credit card or putting yourself in debt to live an alternate reality where you’re dusting off your star on the Hollywood Walk of Fame, think about how long it will take you to pay off what you’re about to buy. Once you’ve awakened from your daydream, rethink the choice and opt for something that falls more into your price range. If family and friends measure your love for them based on how much you’ve spent, it may be time to test their resolve with a new can opener rather than the luxury purse they may be expecting.
You can even throw in a few cans of cranberry sauce for good measure.
After all, it is the season of giving.
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