The holiday season is a time of friends, family, and good cheer. But it can also be a time of pressure, arguments, obligations and spending money — lots of money.
“People get caught up in the season, the lights and emotions of the holiday, often allowing their good financial sense to take a holiday too,” says Michael McAuliffe, President of Family Credit Management (FCM), a non-profit Credit Counseling Agency.
“Even if you do make your list, check it twice and stick to it, it’s a lot easier to save smaller increments in advance, rather than come up with several hundred dollars later,” says McAuliffe.
So what can you start doing today to enjoy a merry season free of financial stress?
- Create a list of everyone you are buying presents for and set a strict dollar amount.
- Open a savings account reserved for your holiday spending. When the holidays are over, start saving for next year in the same account. While some banks still offer “Christmas club” accounts, they often have higher interest rates than traditional savings accounts. An online savings account makes scheduling deposits on each payday easier and can help ensure your success.
- Figure out what you need to put aside each payday and fund the savings account every chance you get.
- Start a list of gift ideas and start watching for those sales. And be mindful of return policies.
Failure to plan can lead to a real financial catastrophe, say experts.
“It never fails that every January we are swamped with people who overspent and under-planned for their holiday spending,” says Sarabeth O’Neil Director of Development for FCM.
Between entertaining guests, traveling, decorating the home and giving gifts, it’s no secret that the holidays come with a price tag. More sensible holiday spending tips and free financial planning tools are available at www.FamilyCredit.org.
Rather than spending mindlessly this holiday, you can take steps to avoid maxed out credit cards, empty bank accounts and other seasonal pitfalls.