Creating a Holiday Spending Budget
The holiday season can be joyous and fun, but can also be stressful on two things you find important: your psyche and your wallet.
The holiday season can be joyous and fun, but can also be stressful on two things you find important: your psyche and your wallet. You may be feeling pressure to buy lavish gifts for all your friends and family, or perhaps you are considering taking an expensive trip somewhere warm. Either way, you aren't alone. According to a recent poll sponsored by SunTrust, 46 percent of Americans feel pressure to spend more money than they can afford during the holidays, a 7 percent climb from 2014.
To combat this problem, it may be helpful to make a budget, so that the angst of overspending doesn't drive you nuts. By figuring out how much you are safely able to spend, you can go into malls without feeling pressure to max out your credit cards. Calculating a budget takes some time and effort up-front, but can be well worth it in the long run, both for your mental well-being and for your bank account.
A few simple steps will keep your spending low and your sanity intact during the final weeks of the year:
Calculate a total
Before you even look at a price tag or go online to shop, it is important to determine how much you can afford to spend on gifts. Practical Money Skills recommended using a gift calculator to determine what the optimal amount is without going into any sort of debt. The calculator not only tracks how much you spend, but tallies how many people you've purchased gifts for. Both big presents and small add-ons will be included in the tally, allowing you to keep track of your purchases without worrying about forgetting a person on your list.
The calculator also has a section for clothes and/or special events, meaning that if you need a new outfit for a holiday gathering, that can be accounted for in the budget as well.
Make a log
Once you have a budget in place, you can proceed with buying gifts for those friends, family members, colleagues and others on your list. However, once a purchase has been made, you aren't out of the clear quite yet. Write down every purchase you've made, so that you can keep your budget up to date. As you add more items onto the log, you will see how much money you have left to spend and who is still unaccounted for.
There are some websites and mobile applications available to do this, such as Giftster . However, a basic understanding of spreadsheet software, or even a pad of paper and pen, can do the trick as well for a gift log.
Be careful of company cards
Among the largest causes of stress around the holidays is the threat of maxing out a credit card. Many people opt for store-specific cards this time of year, as they are given discounts or rewards for using them. However, that trend can be dangerous. According to NerdWallet, those cards can actually do more harm than good , as they have higher interest rates than standard cards and are generally only accepted at one merchant.
Consider using your standard credit or debit card when making your holiday purchases. While you may have to pay a little more for an item in the store, the savings will come back around by the lower interest rate on your bill at the end of the month. You will also be earning rewards points from your credit card, which you can then use at any store you'd like, not just one.
The professionals at Vectra Bank can help you make sure the holiday season doesn't ruin your mood or your budget.