This week I am providing practical advice on how to avoid the hangover that comes from overindulging in Christmas spending.
Today, I want to talk about budgeting. That sounds too formal. Let’s talk about having a plan.
The first step is to decide how much in total you want to spend this holiday season. Some people might say to start with a list of people you want to buy presents for. I think that this is fundamentally incorrect if your focus is on the budget. Money is a scarce resource for a lot of people these days. The amount of money you have available should be the starting point for your spending decisions.
Once the overall budget is set, the shopping list is critical. Make a list of people to buy for. Spend time with your spouse to brainstorm for ideas. Check prices online to confirm that the budget works. Once the planning is done, this shopping list is no different than going to the grocery store.
Having a list also avoids wandering from store to store with only vague ideas of what you are looking for. Like most people (men at least), I am guilty of that. If you are like me, this kind of desperation has lead to overspending.
Presents are obviously a big part of holiday spending, but it is not the whole story. When considering your budget, don’t forget some of the other expenses that go along with the holidays. You need something to wrap those affordable presents in. If you are travelling to spend time with friends and family, there will be expenses for gas, hotels, eating out, plane tickets, etc. If you are going to be the host or hostess, you will have expenses for food and decorations.
My final comment for today is about communication. If you make the budget together with your spouse, you are more likely to hold each other accountable for variations from the plan. The whole point about a plan is to eliminate surprises.
Tomorrow, we will explore the evils of credit cards.
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