It’s Called Currency

Many people have a habit of purchasing their Christmas gifts on their credit cards each year, acting as if they were suddenly surprised to find that Christmas came on the 25th of December…what, again?! Others frantically try to scrape together enough money to buy gifts by cutting corners in the months of October, November and December. Again, they seem to be surprised to find that there’s a major expense in the fourth quarter of the year. If you’re in one of these groups, here’s your clue: it’s time to start planning for next year. First, I want you to take the time to tally up this year’s expenses. Don’t forget to include the new decorations, those fancy holiday scented candles, even the holiday DVD and music downloads you bought on impulse. Also include any special food purchases, like the supplies for your Christmas cookies and your famous eggnog recipe—all three batches. Remember, the holidays include gifts, food, and lots of extra touches that give the season “atmosphere”.

Right about now, you may be suffering from sticker shock. Yep, you really did spend that much on what is supposedly one day out of the year. In reality, it’s more like a full month and then some, especially if you add in your expenses for Thanksgiving as part of the total. You could also include any expenses for New Year’s celebrations and Halloween parties and costumes as well.

Is that number starting to look like a significant percentage of your annual income? If so, you should seriously evaluate what you’ve spent on and decide if you’ll be repeating those expenditures next holiday season. Did you buy too much food and end up throwing a lot of it away? Did you let your generous nature take hold and expand your carefully budgeted list of gift recipients? Were you surprised by an invitation to a party that required gifting? Did you go overboard on spending due to feelings of guilt or some sort of family or peer pressure?

Take a long, hard look at what you spent. Be honest with yourself about how you feel about what you spent. If you’re not happy about it, start with forgiving yourself for being human, for getting caught up in the spirit of giving and celebration. Then get to work on creating a realistic budget for 2009’s holiday spending. How much will you REALLY need to spend on cards and decorations and food and gifts next year? How many parties are you likely to attend? How many children are in your family and immediate circle of friends? Are there any group gifts that you can give next year, ones that can be enjoyed by more than one member of a family or household?

Once you’ve come up with a number, divide that number by 12 to come up with a monthly amount for your budget. Each month, set aside that allotment for your holiday spending. You can put the correct amount of cash into an envelope each month and set it aside or you can set up an automatic transfer into a savings account where it can earn some interest along the way. Either way, get the money out of sight and out of mind as quickly as possible each month. Don’t dip into these funds before you begin your holiday purchases. If you find something in February that’s a bargain and you know your aunt will love to add it to her collection, you can certainly use your holiday funds to buy her gift early. Just write the gift on the envelope so you’ll remember you have it stashed somewhere come wrapping time.

Some planning now will help to take a lot of the stress out of the season later. Knowing that you’ve got all of your expenses covered will allow you to focus on finding just the right gift rather than spending hours tweaking your budget to find the money for a so-so present.

I hope everyone had a fabulous holiday season, no matter what celebrations you and yours enjoy. And I’m hopeful that we’ll all have a happy, healthy and financially sound 2009.

Tags: budgeting, cashflow management, priorities // Add Comment »