As we enter the holiday season, we begin to feel the pressures of gift-giving and other financial stress. While the holiday spirit is a wonderful thing, you must plan ahead to ensure that you do not find yourself regretting its effects in January. After all, accumulating debt or missing your savings goals is no way to start off the New Year!
Talk It Out
One of the simplest strategies to employ around the holidays is to talk to your loved ones about expectations around gift-giving and responsibilities. For instance:
- For all families and friends, are we exchanging gifts?
- For large families, is drawing names to only buy a gift for one person the right approach?
- For families with young ones, should resources be focused on gifts for them?
- What is the spending limit for an individual gift?
- Who is providing food and drinks for any gatherings? How will that be paid for?
While these conversations can be difficult to start, you may find that your loved ones are just as interested in relieving these pressures ahead of the holiday season. Clear expectations can allow for a much less stressful, more meaningful experience.
Budget for It
If you have never done this, start by writing out the name of each of your friends and family members. Identify your ideal budget for gift-giving allowances for each person, and total it up. If the number exceeds what is appropriate for your personal finance plan, begin by reducing everyone’s allowance by the percentage that you are over and reassess those totals. Once you have this number, stick to it! If you find that you have additional room in your annual spending plan, you can also consider a contingency budget that would allow you to exceed the allowance for an individual by a few dollars without worrying about it overall.
Plan for It
As it turns out, the holiday season (and birthdays and anniversaries too!) come around at the same time each year. By identifying, in advance, your allowance for individuals and your overall gift-giving budget, you can divide the total required funds by 12 months and include it in your monthly budget. As an example, let’s say you add up your gift allowance for your loved ones’ birthdays, anniversaries, and holidays and it totals $600 for the year. By setting aside $50 per month ($600 / 12 months = $50) into a separate account, you will always have the funds you need when it is time to buy a gift.
On the flip side, you may determine through your conversations with loved ones that in lieu of gifts, shared experiences, acts of services or just plain old time together is the preferred gift. In this case, you can focus your holiday budgets around snacks or beverages for the events as well as charitable giving.
However you do it, I hope you have a wonderful, and safe, holiday season!