Why You Should Be Preparing for the Holidays NOW

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. Β 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. πŸ™‚

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?

 

*Photo byΒ Nathan LemonΒ onΒ Unsplash

26 comments

  1. YES! We were recently talking about this topic here in our house too. You beat us to the blog post. πŸ™‚ Will definitely share this one though because thinking about these things now is so much smarter than waiting until the last minute like so many families tend to do.

    I particularly like the “start shopping now” tip. It’s so smart to pick up little things over time when you see them, especially on sale. It also makes it easier on the cash flow when you can spread out the purchases over several months.

    • Laurie says:

      LOL, funny. πŸ™‚ We totally hit the sales in advance. With three girls, all of whom have somewhat expensive shopping tastes, we can maximize what we get them, in the brands they like, by shopping early. Thanks, Brad!

  2. Dear FF,

    We don’t exchange or purchase Christmas gifts for anyone so that solves that.

    I understand that isn’t normal or “doable” for most people so I would suggest doing as much shopping as possible starting right after Christmas! January and February are great months for good sales as consumers have slowed down their shopping and stores need to keep their numbers up.

    My kids birthday is in mid-December. They are allowed to pick one present each (they usually pick a LEGO set valued at around $150-200, they know what they want for the next 3 years!) and then we pick a few more gifts (joint or individual, depends). All the grandparents pitch in and we usually spend $600 total although we generally buy them what they will use and don’t worry about price. No stress about trying to find gifts at the last minute.

    Truth be told, I’d prefer to just give them gifts throughout the year instead of waiting for a “holiday” and we may get there eventually. People scratch their heads enough at our current practices so slowly but surely πŸ™‚

    Besos Sarah.

    • Laurie says:

      Sounds like you’ve got a great plan, Sarah!! Especially love your idea about stocking up in January, etc. You can get some really great deals that way.

  3. Isn’t it nuts how expensive we all make the holidays? I honestly would prefer not getting/giving gifts to adults and only buy modest presents for the children. The holidays are always about family for me, and I think focusing on gifts takes that focus away. Unfortunately no one else in my fam agrees, so I’m stuck buying gifts! Grr.

    We save for the holidays all year with our rewards credit card. We upgraded from a 1% cashback card to a 2.5% cashback card, so we should have anywhere from $300 – $600 in “free money” to fund the holidays. Not bad!

    • Laurie says:

      We do the rewards card thing too. If you can be disciplined enough to pay it in full every month and not spend over your budget, it’s a great way to earn some extra cash!

  4. Kathy says:

    I’m always on the lookout all year for items I think would be great gifts. I’ve already purchased an item for my daughter in law. And, fortunately, we are in a lovely place economically where we can have a generous gift budget. I sincerely love giving gifts I think the recipient will love/use. Having said that, we do plan a budget at the beginning of the year and simply put 1/12th of it in an account each month so anything we get will be instantly paid for when the credit card bill arrives. And we do use cards for online shopping. Reward points, you know, plus it helps us keep track of how much was spent without having to write amounts on a cash envelope. I do recognize that other people don’t do things our way but it works for us and I have no worries about how to pay the credit card bills.

    • Laurie says:

      Such a great idea, Kathy, dividing by 12 and putting away the amount each month. My mom does something similar. Planning ahead really does make the holidays so much more enjoyable!

  5. Josh says:

    My wife & I have already purchased some Christmas gifts that we buy from charities (support a good cause with our spending) and other discount retail sales (don’t give as much money to the retailers in a single purchase). The trick is remembering we bought them.

    We are also planning on a small day trip or overnight trip during our break where we can use our hotel credit card reward night to take a “free” trip.

  6. We like to get away for the holidays. We used to spend every Christmas in Niagara Falls swimming and jacuzzi-ing. When we lived in Florida for that year, we spent Christmas in The Keys. We stopped exchanging gifts more than a decade ago. It was so nice when that stress was gone for good. No need to tip the mailman anymore. We have a post office box now. No need to tip the trash collector. We take our own trash to the dump. No need to tip the hair stylist. I’m our hair stylist now. We don’t get the paper, and our kid is 31. Yep, I’m one relaxed gal. πŸ™‚

  7. katscratch says:

    But. But. Nooooooooooooooooooo I’m not ready for winter!!!

    ….all great ideas, though. We are a family who doesn’t purchase Christmas gifts, so my holiday budgeting is pretty simple πŸ™‚ I do, however, strongly endorse the budget line item for gift giving year-round.

  8. Brian says:

    Never too early to start planning. Also great to begin these conversation with family and friend and set those holiday expectations now. I’m sure many will be relieved to have a plan and not stress about spending more money than they have come the holidays.

    • Laurie says:

      We’ve cut down with extended family giving and everyone is SO happy about that. Not one person is disappointed. We’ve cut all of the sibling gifts and do for the kids only. What a relief!

  9. All good tips. We bank our rewards card until late November, and I will have some rebates and Swagbucks to cash in as well. I don’t do too much shopping, this early, though, as I’ve been known to lose things I buy more than about a month out (plus I don’t want a certain nosy and suspicious Santa doubter stumbling across the wrong thing.)

    Our extended family cut back last year when we doubled the number of kids in the group. (One baby and a marriage to someone who already had 4). I’m glad we’ve dropped down a bit and wish the other side would do the same.

    • Laurie says:

      That is so smart to bank your rewards. LOL, funny about the early shopping perils. πŸ™‚ Yeah, the cutting back on gifts thing is nice. Hopefully your other side falls in line. πŸ™‚

  10. Ha ha! Agreed, the earlier the better. If you know what to look for, you have more time to wait for the right price point.

    We don’t travel for the holidays, but have lots of gifts to buy. I take great pride in creating themed gifts that (hopefully!) reflect each person’s personality. My Christmas budget is saved on a super-secret spreadsheet. Why? Because we do the budget by person (like you recommended) – this is where the naughtiness factor is reflected. By tracking it, when I’m able to save on one person’s gift, then I know I have more leeway for someone else’s. And having a spreadsheet makes it so that I can quickly update my list throughout the year as I have moments of inspirations for what to get everyone. I’ve only bought 1.5 gifts so far.

    The biggest issue I have each year is I fail to include myself in the list…

    • Laurie says:

      Okay, I am SO jealous that you are creative like that with the whole themed gift thing. Rick’s sis in law is like that. I wish I were more creative in that area.

  11. “commit to sticking to your spending budget for each person” – This is my Achilles’ heel, especially when I buy early. It’s sort of like what I used to do with income tax refunds. I’d know I would receive it in advance, spend with the idea “I’m getting the money for it soon anyway,” and then spend it all over again once it came to my hand. Ugh! (No more of that anymore.) When I have gifts purchased, and then a few weeks or months later see something that “he/she would really love,” my brain does a contortion act, and before you know it, I’ve justified another purchase. I’ll have to write my Christmas budget in stone and then commit to it big time – knowing that my brain can play these tricks on me.

  12. Oh man, do I need this reminder. I’ve never started shopping or planning travel this early but I really ought to: I know we’ll have some big expenses coming up in 5 months. And I bet future Brian will be pretty pumped if even half of the gifts were purchased ahead of time…

  13. Mackenzie says:

    I appreciate this article right now because you have reminded me of the fact that I have no choice but to get my Christmas shopping done early. I am due at the beginning of December and there is no way I am going to want to fight crowds at the shops with a newborn. Thanks for sharing this post Laurie. I need to get on this! πŸ™‚

  14. There are 118 days ’til Christmas (I hope that number’s right). I can’t wait for the Holidays to come! We’ve already made travel plans (a couple months ago, actually) and, just like the past years, we’re always planning ahead.

    I know many who prefer leaving everything for the last minute and always end up spending too much and complaining in January. I’ve also heard of so many who actually take out loans to have money for the holidays! If that’s not a bad idea, I don’t know what is!

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