Holiday spending can quickly get out of control. As fun as the holidays are, who likes getting a big credit card bill in the mail the day after New Years? Here are some practical tips to keep holiday spending under control and have fun without breaking the bank.

  • Create a holiday budget. If you spend from your general checking account or credit card, it's too easy to justify small purchases because they won't really have an impact on your overall budget. Wrong! Those $5 purchases every other day add up fast. Take control by making a separate budget for the holidays.
  • Keep track of your holiday spending. Remember those little purchases? You can't wait until January to see just how quickly they ate into your overall budget. It's too late then. Keep track as you spend, so you don't go over budget.
  • Divide your budget by 12 (yes, you should be thinking about Christmas beginning in January!!). Each month, deposit 1/12th of your holiday budget into a separate bank account or as cash in a specially marked envelope. When Christmas rolls around, guess what? You've got a stash full of money you can spend guilt free!
  • You really need to have an overall budget, so you know how much you can safely set aside each month and still meet your basic priorities and future financial goals. Your overall budget will allocate money to many different categories. Think of the holiday budget as a micro-budget. It's budgeting the money within just one category of your overall budget.
  • It has to be important to you. The clients I see struggle to get control of their finances are not fired up about taking control and reaching a goal. Don't wait until you have no other options. Get fired up now! Make it important that you avoid the financial disaster that comes with not paying attention to your money.
  • When your holiday money stash is gone, stop spending! You will be sure to wreck your overall budget if you keep spending and burn through your general checking account too, plus put some on the credit card. When the holiday money is gone, stop spending!
  • Plan ahead for travel expenses. One year we traveled a long distance and encountered very heavy traffic and bad weather. We wound up making an unplanned hotel stay because we were so exhausted. It was great arriving the next day feeling refreshed and ready to visit with family instead of being wiped out for a day or two and then having to turn around and go home. Having a little money available for contingency plans can help make family trips and get-togethers more enjoyable, but the only way to have a little money available is to plan ahead.
  • If your new budget means your children or family will receive fewer gifts, consider talking to them up front and explaining the situation. In most cases, they will understand. Waiting until after they open their gifts could leave a bad taste in their mouth. Give them an opportunity to be grateful for what they do receive, and have the talk up front.


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    Climbing the Money Tree


    R. Joseph Ritter, Jr. CFP® is a CERTIFIED FINANCIAL PLANNER(TM) and founder of Zacchaeus Financial Counseling, Inc., a non-profit organization providing financial planning services to low-income households and households experiencing financial strain.

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