Welcome back to 12 months to get good with money, a series of bite-sized steps to take over each of the 12 months of the year to get good with money slowly. Let’s recap the past few months:
In January, you made a budget.
In February, you made savings goals.
In April, you made a plan for your taxes.
In June, you created your investing plan.
In August, you made a plan to earn more.
In October, you tried your hand at a no spend challenge.
Now it’s November, and your goal is to make a plan for the holidays.
This is, of course, specific to those who celebrate holidays and specifically gift-giving holidays this season. While this doesn’t apply to everyone, I have seen firsthand people getting into debt over the holidays or simply letting it stretch them too thin, so I still wanted to address this given that it’s a big problem for so many people. And while we may not all celebrate holidays this season, we are all susceptible to the rampant consumerism and marketing that comes along with it, especially when it comes to things like Black Friday and Cyber Monday.
According to NerdWallet, “More than half of 2019 holiday shoppers (55%) incurred credit card debt, and a third of those indebted shoppers (33%) still haven’t paid it off. That’s almost 40 million Americans who are still carrying holiday shopping debt from last year.”
I don’t know about you, but these figures really concern me. Keeping a budget and having a plan for your money means that you should never be taking on consumer debt for expected expenses– and the holidays come every single year.
So, let’s talk about how to make a game plan for the holidays this year.
- The best way to plan for the holidays is year-round
- If you spend a good chunk of your paycheck on the holidays, chances are that it’s a good idea for you to set up a holiday-specific sinking fund (a savings account for a short-term goal) and contribute to it each month. In my case, I have to buy gifts for 10+ people, and I don’t want money to be an object. So, I set aside $65 each month in order to cover gifts as they come up.
- According to Mint, the average American spent $942 on gifts alone, and another $227 on other holiday expenses (decorations, food, etc.) For me, these figures together make up an entire paycheck. If you’re in a similar boat, saving throughout the year is your best option to not go into holiday debt.
- To save up this amount over the year, you’d need to put aside about $97 per month. This is no small amount for a lot of people, but it’s much more doable than putting up $1,169 over November and December.
- If you haven’t been saving year round, create your plan for next year NOW and spread out your purchases as much as possible this year
- Don’t let yet another year go by where you haven’t saved for the holidays year-round, if you fit the criteria we just discussed. Incorporate these savings into your budget now.
- But this still leaves the issue of what to do if you haven’t planned properly this year. The key is to spread your purchases out as much as possible in order to lessen the strain on your wallet.
- The second key is to be very honest with yourself and those in your life about what your budget for gifts is. While you might not be able to afford awesome gifts this year, know that you’re staying out of debt for the possibility of being able to save for even better gifts as early as next year. If you get into debt this year, you could very well find yourself unable to save for next year, and therefore in a harsh cycle of debt.
- Set a clear mindset and constraints for the big sales
- If you’re someone who’s incredibly tempted by Black Friday/Cyber Money, you need to get really real with yourself about that. It’s one thing to plan and save for these sales and be able to cover the costs, but it’s another thing entirely when you find yourself stretched way too thin because you didn’t plan ahead or your overspent due to the pressure to buy the sales.
- Sales are ticky like this– we can convince ourselves that we’re saving money, but in a lot of cases, we wouldn’t have spent any money on these items if we didn’t see the sale tag.
- If you’re already on a budget, have savings for this time of year, and know you won’t have a retail blackout and wake up having done too much damage to your wallet, then by all means, shop the sales.
- If this isn’t you, I recommend avoiding the sale events. It might seem crazy or impossible, but it isn’t. I didn’t buy a single thing during Black Friday or Cyber Monday for the past 2 years, and I was still able to afford the gifts I wanted for my friends and family, and even find some independent sales.
So, wherever you’re at this year, your goal this month is to make a plan for the holidays. Even if you’ve fallen off of budgeting, it’s absolutely crucial to get back on the horse for these next few months, so you can take inventory of your holiday spending and make sure you’re still working within your means. If you haven’t already, get my free budget templates here.
P.S. If you need more guidance in your money journey, I created my Money Map Workbook just for you.