Personal Finance 

Haven’t started budgeting for the holidays? Now’s the time

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If you don't start budgeting for the holidays until Black Friday, you may end up overspending.
Americans have a habit of getting buried in debt during the holidays.

In November 2011, Consumer Reports conducted a holiday spending survey and found that 14 million Americans were still paying off bills from the previous year’s holidays. That’s only about 6 percent of us, but the point is, we usually don’t start budgeting for the holidays until it’s too late, and that can lead to overspending and ultimately, debt.

“We tend not to think about holiday spending until this time of year,” says Thomas Nitzsche, a certified counselor at ClearPoint Credit Counseling Solutions. He says it’s never too early to prepare for holiday spending by making a budget. In fact, when I asked him what can be done to prepare for the holidays now, he told me that, at this point in the year, we should probably start planning for next year.

“Really, it’s a good time to think about it all the time,” Nitzsche says.

If you haven’t already started saving, it’s now crucial. Nitzsche says there are a variety of creative ways to encourage saving for the holidays throughout the year.

“Get a bank account that allows you to round up your purchases and deposit into a savings account,” he says. “Another option is using a rewards program on a credit card. You get cash back every quarter, and you can take those rewards and use them for your holiday spending. Or turn them in for gift cards to places you know your family members like.”

Nitzsche warns to pay off these cards every month; otherwise, you’re not truly being rewarded.

Holiday budgeting should also be tackled at this point in the year. It helps to look over last year’s expenses and make a thorough list. Christmas cards, gas for road trips, giant turkeys — they should all be included. ClearPoint offers a handy holiday planning calculator, which I found useful.

Finally, the earlier you prepare for the holidays, the more thought and research you can put into your spending. Generally, travel is cheaper the earlier you book it, so don’t put off deciding where you’re going for the holidays.

And if you’ve ever bought gifts on Christmas Eve, you know that last minute shopping usually leads to impulsive, excessive spending. Plan your gift-giving now so you can consume more mindfully.

“I’ve really tried to develop my gift-giving skills to get away from what’s the biggest, most expensive item to what’s the most thoughtful and long-lasting,” says Nitzsche.

An example he gives is opening a college fund for his baby niece last year.

Black Friday doesn’t have to be the time when you finally start thinking about what you want to spend — the best way to make sure you don’t dig yourself into a hole financially is to start budgeting for the holidays well in advance.

When do you start thinking about holiday spending, and how do you budget for it?

(Photo: Beth Rankin)

{ 9 comments, please add your thoughts now! }

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9 Responses to “Haven’t started budgeting for the holidays? Now’s the time”

  1. Wilma says:

    Because Corporate America has highjacked Thanksgiving and Christmas our family began to re-arrange our holidays to suit us. Family vote decides what weekend works best. Thanksgiving is the weekend before or after and Christmas is New Years Day or a weekend. Like I said it’s family vote.

    We can take advantage of a before and after sales for our gift giving and nobody has to work because we can get vacation days if needed. Sad that we have to go through all that just to have a family meal but it works. And the added bonus of not having to rush to buy gifts makes shopping easier, less stressful and there’s more bargains.

  2. dojo says:

    We’re spending VERY LITTLE on the holidays (we don’t bother celebrate, maybe from next year, when our daughter is born) and have NEVER went into debt for it. It’s really horrible to start the new year with more debt just because of the holiday overspending.

  3. Kristin Wong says:

    I thought so too! What an awful way to kick off a new year–by paying for last year’s impulses.

  4. Barb says:

    We’ve stopped giving gifts and now give gift cards so those can take advantage of after Xmas sales.
    I just like the whole shopping aspect, but I mostly buy what I and others need or have wanted for a long time and can afford.
    On my Xmas list: new down blanket (it’s cold in Chicago), sound bar for my flat screen TV (wanted since last year), new socks and a new pair of boots/shoes for work.

  5. fabclimbers says:

    We have NEVER gone to black Friday sales. That is a sure way to overspend.

    We have a large extended family. We used to do a grab bag with a dollar limit. We would also submit a list of wants with our paper for the drawing. That cut way down on spending and we each got 1 nice gift instead of a bunch of junky ones. I always spent over the limit, but I only had to buy one gift. I usually included a gift receipt just in case.

    Now we just call to say high or get together for dinner at the house. Our exchanges are now like a bottle of wine or other treats. The grandkids are now the focus of the gift giving. For distant relatives we give gift cards and call them on the holidays. We don’t spend too much on that either. Just want them to know they are remembered.

    Our “extra spending” for the holidays is offset by not spending on ourselves, and the credit card payment in January is not much higher than usual, so we can pay it all off.

  6. Agreed! There’s no reason for us to do things the way retail companies want us to. Starting to save up now and keeping a budget isn’t really what they want, but it’ll sure go a long way for your wallet.

  7. Huskervball says:

    I buy little things all year. I have a treasure trove that I raid for Christmas. We are older so our gifts are given with an eye to the future of our recipients.

    I like to give gifts from Heifer Intl or Kiva. My daughter is a naturalist so her gift is usually reflective of that.

    I will be cutting way down on mailed Christmas cards and using FB or email for greetings.

    It is a problem to get together so our celebration day is governed by kids’ schedules. It doesn’t matter what day, what matters is our love for each other.

  8. Kristin Wong says:

    Have you seen those Jibjab online greeting cards? They’re goofy fun. My parents send those instead of traditional mailed Christmas cards. Silly stuff, but I can’t help but chuckle when I get one each year.

  9. Viki says:

    We have $50 auto-deposited into a Christmas account through our credit union every month. It’s then transferred to our checking account on Nov 1 every year.

    We have no children so buy for nieces/nephews 21 years old and under. That’s eleven kids this year. We give $35 gift cards to each child. Only one lives in the area so this saves on postage and trying to figure out what the kids would want. I don’t care for what most kids like because I know it’ll be obsolete in their world within 3 months so I leave the purchasing to them.

    My husband and I don’t exchange. We usually go on 2-3 trips a year so we’re not wanting for anything.

    Money over and above the $35 x 11 goes toward Christmas cards, postage, baking for neighbors, special wine for Christmas/New Year’s, the incidentals that go along with Christmas. We try to do special things like peppermint schnapps and hot cocoa by the fire, going to the town Christmas tree lighting, renting old, wonderful Christmas movies and remembering that it really is all about Jesus Christ not Walmart or Nordstroms

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