I absolutely love the holidays. But can you believe it’s almost that time of year already! There is no escaping how quickly the holidays are coming up and that means extra expenses are coming with it. Whether it is buying gifts, traveling to see family and friends, holiday parties and decorating your house, it all costs money. Have you started saving for the holidays?
Last year, Americans racked up more than $1,000 in holiday debt, according to MagnifyMoney’s annual post-holiday debt survey. Of the respondents, 78% reported that they wouldn’t be able to pay off their credit cards by January, and 15% said they could only make minimum payments. To help offset the holiday costs, you should start saving money now in preparation. Create a plans now to save up and help make this holiday season less stressful.
Below, are seven tips to help you prepare financially for the holidays.
1. Make a Shopping List
Start by making a list of everyone you usually buy gifts for, don’t forget the in-laws. If you don’t know what you want to buy them each person yet, simply assign each a price range. It is okay to add a little extra to each for tax and shipping fees purposes. If the list is too long for your budget, go through it again and remove names or spending amounts. Also include in your list any travel plans you have for the holidays. Include any estimated travel costs in your list of holiday expenses, in order to start saving for the holidays.
2. Set up a Budget
After making your shopping list, create a holiday budget so you can make a plan for how to pay for everything. Start by looking through how much you spent last year on holiday shopping. This can give you a good idea of your history of spending. Break down costs and set small goals for each person or event. Plot out how much you can spend on gifts, decorations, food, travel and all other holiday-related expenses.
3. Open a Holiday Savings Account
This can be pretty useful for managing your saving and only using this account for holiday shopping. Once you have a set holiday savings account, make a plan to regularly transfer money to it to reach your goal. Two strategies I use for saving money are direct deposit and automatic transfers each month for a specific amount.
RELATED: Your 10-Week Holiday Savings Plan
4. Make the Most of Offers
Cyber Monday, Black Friday, and Amazon Prime sales. Yay! There are plenty of discounts and offers available today if you are keen to look for them. But be sure to keep in mind that discounts are only beneficial to you if you intended to buy the item in the first place. Also use apps like RetailMeNot, Honey and Rakuten to get cash-back deals and discounts automatically when you shop online and in stores.
5. Consider Purchasing Some Gifts Now
Holiday prices can be tricky because many stores either lower their prices or while others jack them during this period. Determining whether you’ll save money by purchasing a gift early depends on the particular gift. Despite all the sales that stores offer during the holidays, not all items have a better deal at the end of the year. In fact, due to high demand during November and December, some prices tend to go up- so purchasing them earlier may be a better option.
6. Cut Back on Non-Essential Purchase
A great tip when saving for the holidays is cutting back on all non-essential spending. Identify and cut out unnecessary costs. Don’t eat out for a few months, restrain yourself from buying new clothes, and cut back on everything else you don’t need to survive. This can help you lower costs each month leading up to the holidays, which hopefully makes gift shopping much easier.
7. Be Cautious With Credit Cards
Credit cards are handy financial tools, but they can be dangerous at Christmas time. Some credit card customers end up with a holiday debt hangover that lasts well into the new year. It is easy to lose sense of financial responsibility when it comes to using a credit card, especially during the holidays. Use your credit cards cautiously, spend within your means and only use if you can pay off any balances with relative ease.
Always use the card that offers the lowest interest rate. It’s also a good idea to track your credit card spending.
Now is the perfect time to start saving for the holidays. If you start now you’d be ahead of the game by following the tips outlined above, you will be all set for the holidays. Besides, when Christmas Shopping time comes, the financial impact won’t be stressful.
Take advantage of technology this holiday shopping season and use one of the many budgeting and money-saving apps such a Mint to keep tabs on your spending.