100 Days until Christmas? Now What?!
As of today, you have 100 Days Until Christmas, so let’s talk about the “B Word”: you need to have a budget for Christmas and it is time to create one. Sit down and take a good hard look at your finances to see if you can get through the holidays without putting anything on a credit card. Better yet, vow that you WILL get through the season without putting anything on the credit cards, even if that means that hard choices will have to be made about gift-giving and entertaining.
Step #1. Determine your total budget
First, decide how much you are going to spend.
According to a survey done by T. Rowe Price, 64 percent of American parents admit to spending too much over the holidays. And more than half of them say they never stick to their spending budget.
Don’t let this be you, and decide how much exactly you feel comfortable spending this season. Know all your fixed expenses so that you can determine your disposable income (bear in mind that saving AND investing are also considered fixed expenses!).
Step #2. Make a list of people and check it twice
Make a list of EVERYONE for whom you will buy gifts. It may look something like this:
- Mom and Dad
- Brother and Sister-in-law
When you’ve made this list – prioritize. Who do you absolutely *want* to buy gifts for?
Listen: It’s easy to head out shopping then see the perfect gift for your friend’s neighbor’s friend that you met once at a potluck years ago. It’s nice of you to think of him but that gift either comes out of your gift budget or it will hit your credit card.
Now, here’s a very cool idea we found online. Assign a point value of 1 to 5 to each person based upon a comparative amount you would like to spend on them. Then total all the points, divide the total amount you plan to spend by the total points, and go back through the list of people and multiply the Christmas budget factor by their point value.
Sounds confusing? It’s not. Check out this example:
If your budget total is $1,000, and your distribution is Mom and Dad (5 pts.), Brother and Sister-in-law (5 pts.), Boyfriend (5 pts.), Friend (3 pts.), Coworker (3 pts.) and Teachers (2 pts.), your total points is 23 and your Christmas budget factor is 43 ($1000/23 = 43).
Hence, if you multiply each person’s point value by that amount the result is:
- Mom and Dad: 5 x $43 = $215
- Brother and Sister-in-law: 5 x $43 = $215
- Boyfriend: 5 x $43 = $215
- Friend: 3 x $43 = $129
- Coworker(s): 3 x $43 = $129
- Teachers: 2 x $43 = $86
And voilà! Now, you know how much you can spend on each person.
Step #3. Stick to your budget and track it!
After determining how much you’ll spend in total, and how much you can afford to spend on each person on your list, it’s now time to get down to the nitty-gritty: what you’ll buy. When those receipts start coming in and expenses hit your account, track them!
Try using the money manager inside online banking. It’s a free tool to help you set goals, budgets and categorize spending.
Log into Online Banking (www.GreenCountryFCU.com) and select Money Manager. Just follow the prompts to Add a budget or Set a Savings Goal. Easy-peasy!