By Kara Norris
Ringing in the New Year with financial goals for next year’s holiday season may not sound very exciting, but as those post-holiday credit card bills pile in and our bank accounts shrink inversely to our holiday waistlines, resolving to make financial goals now for the upcoming year will save you from yet another cash-strapped holiday season. During this post-holiday period of reflection, take stock of what made your holiday season successful and what you could have done without or differently. Pull bank and credit card statements from the last quarter of the year and write down EVERYTHING you spent on seasonal activities, decorations, parties and gifts.
The best way to begin a budget is to look honestly at your current spending patterns: once you have a clear understanding of how much your family spends during the holiday season, determine what you will need to save on a monthly basis (after paying off this year’s holiday bills!) in order to have the same amount of money set aside come next November. And if that number seems awfully high, it probably is. Most of us get carried away by the excitement, cheer and PRESSURE of the holidays and end up making financial decisions we later regret. According to a recent report in Forbes magazine, people spend an average of $1100 on holiday gifting, but parents spend closer to $1700!
Make a decision about what works for your family and what you are comfortable spending next year and develop a holiday savings plan based upon that number. Remember, if you are having to charge presents or spending money from a rainy day fund to cover holiday expenses, you are spending too much. Holiday savings should be separate from emergency funds dedicated to things like medical bills and unexpected car repairs. Commit to putting aside 10% of your total holiday spending on a monthly basis beginning in January so that you are fully funded well before Thanksgiving of the next year. If you cannot save for next year and pay off your current holiday bills, I recommend putting aside a small amount, say $25 a month, to get in the habit of saving until you can save more. If your family is on a tight budget, it is more important for you to pay off current debts and become fiscally solvent than it is to buy your spouse, children and family members multiple, expensive presents.
Once you’ve decided on a holiday budget that works for your family’s financial situation and begun a monthly savings plan to get there, make a commitment to stick to your budget without guilt. Stop worrying about what other families might be doing and concentrate on what is best for your family and you. If you plan ahead, you won’t be as stressed out and you won’t find yourself making impulsive purchases. It’s often helpful to talk to your children and extended family about your holiday budget in general terms. For example, many families take the approach of gift-giving only to children, or drawing names for gift exchanges in order to relieve some of the financial burden of the holidays. It is perfectly acceptable to say that your family has decided to put a lid on gift giving to extended family and friends this year. You can also let your children know that the holidays are about more than gift-giving and limit their present requests to one major item and 2 or 3 other things.
The important thing to remember about developing and sticking to a holiday budget is that what works for one family may not work for another. You cannot compare what you do to your siblings, neighbors, or friends. It is important to come up with a plan with which you and your family are comfortable and that not only removes some of the stress from an already busy holiday season, but ensures that your post-holiday life will be filled with gratitude rather than regret.
Kara Norris, Ed.S., NBCC, is counselor at New Summit School and The Mississippi Community Education Center.