Christmas budgeting and new year money resolutions
Christmas,for most of us, is the most expensive time of the year. It’s not easy to stick to a budget – shopping can be so tempting! Many people go nuts with Christmas and holiday shopping. However, if you want to live a life of building wealth and making wise financial decisions, you need to prepare for Christmas. With a little planning you can get the most from your money and see in the New Year without mountains of unplanned debt. Hopefully, you’ve already started thinking about how much money you will spend this holiday season, and maybe you’ve already started saving for it.
You have to start preparing for Christmas to the point where you don’t need to use your credit card, so here are five steps for building your shopping fund for the holidays:
Step 1: Start drawing up a Christmas budget. Make sure you think of everything you need to buy: presents, food and drinks, entertaining, decorations and new outfits. Who knows, you might even be tempted to squeeze in a weekend trip for some Christmas shopping in Oxford Street! It’s your budget! You know your spending habits. You know what you need and what you desire. So make sure your list is comprehensive.
Step 2: Do some research to get the real cost of things. Some things are best paid for early to get the best deals (for example travel). If limited choice does not bother you, you may leave some presents until the last minute hoping for some discounts. If you really trust your luck, you might as well wait for the seasonal sales. Compare prices of different retailers as well as internet and shop prices – they often differ – and look around for discounts. Stick to websites which you can absolutely be convinced they are not scams. The cheapest price might not be the best price.
Step 3: If you haven’t set any money aside, do so now. Budget how much you can set aside even from your December salary. Any extra income (such as bonuses) that you expect to earn during the next few weeks should also be thrown in your Christmas fund.
Step 4: Once you have an idea of the total of all your planned income, have a look at your expected expenditure and check whether you will have enough coming in before Christmas to cover them all. Don’t forget your usual bills that are due around this time.
Step 5: If you don’t think you’ll have enough, go back through your Christmas spending and look for ways to make cutbacks. True, that can be a tedious exercise but that’s the way you should go around it unfortunately.
If you can’t avoid credit, at least use it wisely. Your credit card probably charges the highest rate of interest of any of your loans, so paying off your card may need to be your number one priority. The best policy is to pay your balance in full each month. If that’s not realistic, especially during Christmas, then pay more, even if it’s only a bit more, than the minimum required and stick to that amount. Most people only need one card – if you have more, you are likely to pay unnecessary extra fees and charges.