Sense & Centsibility Blog

10 Tips To Avoid Financial Chaos This Holiday Season

ChristmasFor many families, the holidays and overspending go hand in hand. If the holidays have created financial chaos in the past for your household, you may be wondering how to survive the holidays this year. With some thought and creativity, you can design a joyous season without racking up enormous credit card bills to spoil your new year.

1. Decide how much you can afford to spend.

Ideally, you have saved some money to spend over the holidays. If that hasn’t happened yet, don’t give up on this idea. Now is the time to cut back on extras like movies, dining out, gourmet coffees, and so on until the holidays are over. Without looking too hard, there is always something in a budget you can trim back to save money.

If you plan to use money you don’t have (credit cards), be prepared it may take a very long time to repay the debt. If you only make minimum payments, it typically takes several years to pay off credit card debt. Check out our online calculator to see how much it would cost you. Do you really want to still be paying last year’s holiday bills when the new holiday season rolls around?

If you decide to use credit, set a limit for the amount of credit you plan to use, and stick to it! At the most, choose an amount you can repay within 3 months to avoid high interest charges and overspending.

2. Budget for all the extra costs.

We often focus on gift-giving and forget about other holiday-related costs that can drain our cash flow. These costs should be considered BEFORE holiday spending begins. Such extras include decorations, extra food and drink, greeting cards and postage, travel expenses, holiday donations, and shopping costs like gas and parking.

3. Set reasonable expectations for your family.

family cookingIf cash flow is tight and gifts will be minimal, be sure to prepare your kids in advance. This will keep their expectations realistic and avoid the disappointment that comes with wanting every toy advertised on TV! It can also help to relieve parents of any guilt they may feel for not giving “enough” to their children.

To keep gift costs down, consider exchanging names or setting reasonable gift limits. You could also skip gifts altogether and plan fun activities to gather your family or friends together! Go to a Christmas tree farm and cut down your holiday tree. Make angels in the snow or star-gaze together on a crisp, clear winter night! Or, try hosting a family potluck dinner which may lead to a new family holiday tradition.

4. Give gifts that engage children’s interests and imaginations.

Books, craft kits, building blocks, puppets, crayons and chalks can provide hours of fun at minimal cost. Avoid toys that require batteries as they are expensive to use, and may break easily. Match gifts to a child’s abilities, but buy gifts that encourage a child’s creativity.

5. Shop early.

By knowing how much you can afford to spend at the holidays, you can divide that number by 12 to determine how much to save each month for next year’s shopping. Having cash on hand allows you to buy items on sale throughout the year. Another strategy is to sign up for email alerts for sales with big retailers. Or, buy one gift every paycheck.

6. Find a family project over the holidays.

VolunteerYour family could organize a pet food drive and donate the items to the local animal shelter. Or, volunteer your time to serve a holiday dinner at a homeless shelter. Another option is to encourage your children’s school or your church to collect winter coats, hats, and mittens for needy kids. Besides showing kindness to others, your children will learn there is more to the holidays than just gifts for them.

7. Make coupons as stocking stuffers for your kids.

Each coupon can be redeemable for time with mom or dad doing a fun activity together, like a trip to the library, playing dolls for an hour, and so on. This gives each child quality time with parents, and shows how important relationships can be rather than accumulating more stuff.

8. Make coupons for others tucked into hand-made holiday cards.

These coupons can be redeemed for services like babysitting, lawn care or snow shoveling, cooking, or cleaning someone’s home. Helping out will mean more to the recipient than receiving a gift that is useless, or does nothing but collect dust on a shelf somewhere.

9. Make gifts like baked goods or holiday wreaths.

Everyone loves home-made baked goodies when you deliver them personally and stay for a visit. You can make your own wreaths with natural materials you collect outdoors. Buy inexpensive grapevine wreaths; then add cedar and fir boughs. You can wire on pinecones and a bright, holiday bow. Voila – a festive decoration to use or share with someone on your gift list that will last the winter season!

10. Keep track of spending.

By using cash, you can track your spending and keep it under better control. Every few days, reconcile your shopping list to make sure you don’t spend more than allocated. Check in with your spouse regularly to see how much he/she is spending to both stay on track.

LSS Financial Counseling is dedicated to your financial wellness this holiday season. Use our tools to gain control of your money and you can start the new year off right....without a huge load of credit card debt! Give us a call at 888.577.2227 to schedule an appointment.

From all of us at LSS...we wish you a safe, healthy and happy holiday season.

Author Barbara Miller is a Financial Counselor at LSS and specializes in Bankruptcy Counseling and Education.