The holidays are here, and with them comes the urge to spend. In fact, the average consumer can easily spend $1000 or more on the holidays.
The problem is, if you’re using your credit cards or dipping into savings to pay for everything, you may find yourself with a lot of extra debt in 2021.
The best way to avoid this problem is to create a holiday budget in advance and stick to it.
Here are four tips to get you started.
1. Know What Your Total Is
Before you start shopping, the first thing you should do is determine how much you’re really able to spend on gifts. Ideally, your total holiday spending (including travel and entertaining) should equal no more than 1.5% of your annual income or two weeks’ pay. Your gift budget should be no more than half that amount, so figure one week’s pay for gifts.
2. Know Who You’re Buying For
Once you’ve determined how much you can spend, create a list of who you want to buy gifts for and work backward. Instead of trying to use a specific dollar amount, create a point system. 3 points for immediate family, 2 points for close friends, 1 point for everyone else. Then add up the total and divide your gift budget by that amount.
Take that number and go back and multiply the number of points by that number. If you feel that you aren’t giving enough to those at the top of your list, you may want to redistribute points.
The key is that however much you spend, you avoid going over your total.
3. Research Before You Hit the Store
Once you know what you can spend on each person, create a shopping plan. For example, if you determine that you can spend $200 for each of your two kids, and the video game system your son wants is $350, you may need to pass on the item for now. Or you can use the funds to buy the system as a shared gift for both.
4. Give Gifts of Time, Not Money
When all is said and done, time is often more valuable than money. Homemade gifts and offers of time to help out are often more valuable than anything you can buy at the store.
Looking for more ways to save over the holidays? Talk to a debt and credit counselor today. We can help you to create a budget, and provide you with solutions to pay off your credit card debt.
Want to learn more? Schedule a free counseling session today or call us at 800-920-2262.