Do you remember how your mother would save for Christmas?
My mother would set aside a small amount, usually $5.00 to $10.00 per week into the Christmas gift club at our bank. By the time the holidays arrived, there would be a set amount of money to spend on the holidays, and she wouldn't deviate from that. It was fun to see how much money she had accumulated to spend on Christmas. My sisters and brothers and I knew we'd always have gifts under the tree because of that little gift club.
Those Christmas clubs are mostly things of the past these days. I'm sure the Traditionalists, (the generation that are in their 70's or older) still put money away for the holidays, but the rest of us, probably not. Instead, many of us destroy our budgets buying gifts in the final months of the year. Once January arrives, we often times become concerned as to how we're going to pay off those credit cards that are now coming due from our holiday high.
I have a strategy I'd like for you to consider.
Do you know who Dave Ramsey is? He's a financial person who believes a budget should be done using envelopes to breakout your expenses from the income you bring home. While many of us don't operate without our tech products and home computers for budgeting needs, if you can, try this exercise for the holidays. I'm going to ask you to take his concept and use "one envelope" for Holiday Budgeting. Here's what I want you to do if you haven't started doing something already to prepare yourself for your holiday spending.
Sit down and create a list of all the people you want to buy for this holiday. Once you think you've listed everyone, put a dollar amount by that person's name. Now, you must have some idea what you'd like to purchase for your dollar amount to be accurate and this approach to work. You've got to be REALISTIC in your estimates!
Once you have listed everyone and given a dollar value for the gift, add up the column. Cushion this amount by 10 to 20% so you have some fall back money should you have forgotten someone, or you didn't realize the item you wanted to buy was more expensive then you thought. This is the end value you need to have in your envelope no later than 2 weeks before the holiday. You'll then be able to feel a real sense of accomplishment when finished because you stayed within your budget, and your shopping is complete; YES!
The last step to this exercise is to determine how much you need to put away. Will it be weekly, bi-weekly, or once a month? Whatever you determine works best with your pay schedule from now thru mid-December is how you will approach this outcome.
You need to put that value divided by 11 or 12 weeks into your Holiday envelope.
Let's use this example:
You want to spend approx. $700.00 on this list for Christmas. That means you need to put away approx. $64.00/week for 11 weeks, or $58.00/week for 12 weeks. If you only want to stuff your envelope once a month, you have 2.5 months divided by $700 which = $280/month to go into your envelope. You must be diligent with this commitment or the strategy will not work, and come January you will have another credit card bill to pay off that wasn't necessarily planned. It also means your gifts are now more expensive than planned because of the interest you'll pay on that credit card. You'll have to instill strong will to fight off all the retailers who want you to keep spending, but remember, this approach is looking out for you and your budget!
Well ladies, that's my suggestion for helping you with a Holiday budget. Let me know how your holiday goes with this spending strategy. I'd love to hear how you save, how your saving is going, and any feedback you wish to share. I'm here to help if you get stuck or if it just doesn't seem to be working for you.
We'll talk soon, and enjoy the holidays!