Yep, it’s only August, but according to the latest data you’re going to spend some serious cash on holiday gifts and other expenses. The National Retail Federation said that holiday spending for 2016 exceeded their estimate, landing at 658.3 BILLION dollars.
This was much higher than their estimated $655.8 billion. If you have kids, be prepared to shell out big cash too. This Motley Fool article claims that the average parent spent $422 on each child alone for the holidays.
While the holidays may seem far off, it’s clear by the numbers evidence that saving ahead of time is more important than ever, especially if you’re hoping to avoid taking on more debt by your holiday spending. And we’re hoping to help you avoid doing that.
Here are some tips for planing for your holiday spending NOW, so that you can pay in cash and not meet 2018 with a whopper of a credit card bill.
Make a Holiday Spending Plan
Yes, spending being up is thrilling for economists, who get so excited at the increase in consumer confidence.
However, I still firmly believe that we’re on the edge of another recession – if not worse. This is why it’s more important than ever to plan your holiday expenses well in advance and have the cash to pay for them.
SO, the first step is to figure out how much you’ll spend during the holidays and what you’ll spend it on. Some potential expenses for the holiday season include:
- Gifts for loved ones
- Travel expenses to see family and friends
- Expenses associated with hosting or attending gatherings
- Entertainment expenses for meeting up with friends, family members or co-workers
Now it’s time to make your plan. Here are some tips for starting.
Make Your Gift Giving List
Make a list of all of the people you’ll give gifts to this year – along with how much you’ll spend on each person. Don’t forget to include those extra people such as your kids’ teachers, paper delivery people, mail deliver people, trash delivery people, your hair stylist, etc.
Decide now what your spending budget will be for each person so you know exactly how much money you’ll need to have saved.
A great holiday gift idea for those willing to buck up and dream: Retire Inspired: It’s Not an Age, It’s a Financial Number
Another important key: commit to sticking to your spending budget for each person. This can be especially difficult when it comes to buying for your spouse and children, but you’ve got to have accurate numbers – and stick with them – if you want to avoid accumulating holiday debt.
Remind yourself that you’re doing your kids a favor by being fiscally responsible so that they don’t have to support you in old age. 🙂
Also, remember to account for charitable organizations you support during the holidays. Do you send money to the local missions to help feed the homeless a nice holiday meal?
Do you buy toys for underprivileged children? Do you sponsor a struggling family during the holidays, providing a meal and gifts?
Your gift giving list and coordinating budget numbers will help you stay on track with your money and plan for saving.
Start Shopping Now
If you can, start shopping now for those on your gift giving list and for items you’ll need for parties, etc. Look for sales on things you want to buy for people or need to buy for entertainment purposes. If you are throwing a party and soda is on sale, stock up. If you know your kid wants a certain item for Christmas, look for sales to save money and buy it early.
Just make sure if you’re buying food and drink supplies early to check the expiration date to ensure they’ll still be good when Christmas or New Years rolls around.
Figure Out Your Travel Plans
If you have to travel out of town for the holidays, start making your travel plans now. Decide:
- Will you drive or fly?
- What will your depart/return dates be?
- What do you need to bring with you?
From there you can make plans for the most convenient and/or cheapest way to travel. Is driving or taking a bus an option or do you have to fly? If so, who offers the cheapest rates?
Can you play around with depart/return dates in order to make your travel cheaper/less stressful?
Can you get away with just a carry-on bag if you need to fly? If not, will it be cheaper to ship the stuff you need to bring with you ahead of time?
Do some research and make your travel arrangements now so that you’re not stuck paying enormous airline or other fees at the last minute.
Make a Frugal Entertainment Budget
If you do a lot of entertaining during the holidays, or if you attend one or more expensive gatherings, it’ll help you to plan ahead of time for that too.
For Gatherings Held at Your Home
Start researching inexpensive ways to feed people now. Find good but inexpensive recipes such as these delicious garlic deviled eggs.
Look for fun desserts that you can prepare ahead of time or that are easy to put together, such as this caramilk fudge.
Keep an eye out for sales on things such as plastic plates, napkins and decorative items. Use store coupons at chain home decor stores for an automatic discount of 20% or more.
Make the invitations yourself by using your computer. Find some cute paper at the local craft shop and use a store coupon to buy it.
Also, figure out whether or not you’ll invite guests to bring an item to share or if you will be providing all food and drink yourself. People generally love to participate and bring a dish to share.
If you are providing the food yourself, decide whether you’ll cater or do it yourself. You can also do a combo of the two by making some food, buying some, and hiring neighborhood kids to work as servers, kitchen help or cleaner-uppers.
Friends of ours do this every years. They ask the kids to wear black pants and white shirts as it’s a semi-formal event, and they pay them $10 an hour to get serving experience.
It works well for the kids and it’s a lot cheaper for the hosts. Make up a plan that fits in with how you want to event to go, and budget for the costs of that plan.
For Gatherings You Attend
If you have to attend a few holiday gatherings, keep in mind the cost to attend the event, the cost of any host/hostess gifts you will need to bring and the cost for any apparel you’ll need to buy.
Clothing can be expensive, so maybe you can take a few basic black items you already have in your closet and spice them up with some jewelry, a tie or other accessories.
Dinners out can be expensive too. If you are committed to a gathering at a restaurant and you are responsible for your bill, peruse the menu ahead of time for less expensive dishes or appetizers. Eat a bit of food at home beforehand so you’re not so hungry and can order a smaller meal such as a bowl of soup.
Again, planning ahead is key.
Calculate Your Total Holiday Costs
This could be the tough part. Now it’s time to start adding up your estimated budget for all holiday expenses. Beware if this is your first year planning ahead that the numbers might be bigger than you thought they would.
If the total amount you’ve estimated for holiday spending is just too big, start looking for areas to cut down. Or, start looking for ways to increase your income for a few months. This article on 50 Great Side Hustles could have some ideas for you. My own side hustle – freelance writing – has turned into a bona fide business where I’m making serious money from home.
Having a serious estimate of how much you’ll be spending over the holiday season will help you with your next step of the plan.
Make a Savings Plan that Starts Today
Yep, it’s time to start saving. Making (and sticking with) a holiday savings plan now will give you the chance to put away a small amount of money each week in anticipation of big holiday expenses.
First, take the total amount of cash you need to cover holiday expenses, and then divide it by the number of weeks left until you need to start spending. This will let you know how much you need to save each week.
Then, if you’re disciplined enough, take the money out via an ATM withdrawal or transfer it manually from your checking or savings account each week.
If you think you might forget or just not be disciplined, have your employer or the bank set up automatic withdrawals from your checking account to a new, separate savings account.
This savings account should be different than your emergency fund account. Commit not to touch the money unless it’s for a holiday expense item.
If you’ve never done your holiday expenses this way before, I promise it’ll be worth it. We used to enter every January with an extra credit card bill of $1500 or more.
I remember the peace we felt when we started planning ahead to pay cash for holidays about five years ago. It was so wonderful to enter the new year WITHOUT rising credit card balances. Now it’s habit for us to save ahead of time and pay cash.
Try the saving ahead plan – you’ll like it.
How do you handle holiday expenses?