The gifts are being bought and wrapped as the holidays are upon us. This is a good time to examine spending habits and budget so you won't have regrets later.
It's tempting to spend more than you want on holiday gifts and end up paying off credit card debt most of the following year. It's not uncommon for people to find themselves short of money needed for living expenses due to excessive holiday generosity. The same can be true other times of the year due to a special wedding or a bumper crop of birthdays.
Overspending during the holidays or other special times is a very common practice. Whatever most people gain from lavish gift giving doesn't make up for the stress and mental anguish caused by overspending.
1. Reset Your Expectations: Be realistic about giving what you can afford and give accordingly. Frantically shopping for the 'perfect gift' or exhausting yourself to make this 'the best holiday/birthday/anniversary ever' can take a lot of the joy out of family events. You need to ask yourself if everything really needs to done exactly the way your parents or grandparents did them. Maybe this year, you can do a potluck or order in.
2. Edit Your Gift List: If finances are tight—or even if they're not—you might want to edit down the number of people on your holiday or birthday list or draw names so you're buying for fewer people. Other strategies include setting an agreed upon spending limit, giving homemade gifts or gifts services like baby-sitting, car washes or dinners during the coming year.
3. Use Debit Instead of Credit Cards: When you shop with debit cards, you're actually paying cash without carrying it in your wallet. CAUTION: Your bank may have given you "automatic" overdraft protection; if so, ask them to TURN IT OFF. Interest rates and fees on overdraft loans are typically very high. Without it, your bank will automatically limit your spending to what you have in your account.
If you find yourself in debt in January—or any other time of the year—ask yourself if it was worth it. If it wasn't, start planning now to take a different approach. Saving and planning ahead might make your next holiday or special event even happier—and the subsequent months debt-free.
If you have concerns about your spending or need help budgeting, contact VITAL WorkLife. We can work with you to address your concerns and schedule a free 30-minute consultation with a financial planner. Give us a call at 800.383.1908 to speak with a representative.