6 Best Tips to save money, live better this Holiday Season – Mrs Breathe Easy Finance
The holiday season is absolutely the most wonderful time of the year. I love all things Christmas; Hallmark movies, the fire place, lights, Christmas carols, Santa, presents and the list continues. Personally, I love eating myself into a food coma and spending time with family. We get about 2 months of blissfulness, filled with parties and other festivities. Then mid- January arrives and many of us get what I refer to as the “post holidays blues”. The Post Holiday blues happens around the time we step on the scale and realize we gained a few holiday pounds. It’s also about the time when we start seeing our bank statements and details of financial wreckage from the holidays. We often at this point realize that we grossly underestimated our spending and accrued too much debt with holiday spending.
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According to the Magnify Money “44% of shoppers in the U.S. racked up an average of $1,054 of debt last Holiday Season.” This is 5 percent increase from 2016! One might argue that $1,054 is not a significant amount of money. However, if you make the minimum payments on that $1054, with 15% interest rate (this is the average credit card interest rate in USA), it will take roughly 5 years to pay off this debt. You would have nearly paid double the amount you owe too. Calculator here.
There are easily applicable strategies we can use to avoid a regrettable holiday. We do not have to allow ourselves to be financially ruined by the holiday season. Set a budget, ditch you credit card, use cash/debit, preplan shopping, focus on quality not quantity and become creative.
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The most important and crucial step is coming up with a total budget. This is the maximum amount of money that will be spent. We need that magic number. Know what you can afford. The money should not be borrowed from your emergency fund, credit card, a non-holiday savings account, or even a friend. I’m sure you have money stashed away (wink…wink). Try to be realistic, and come up with a number that is feasible and you are more likely to commit to. It is impractical to have a gift list of 30 people, with only a budget of 10 dollars. More tips on budgeting here on how not to eat up the budget.
Here are some actionable steps that have helped us in the past.
- Put your budget in writing. I’m a habitual offender of leaving my handwritten lists at home, so I type my budget into my Iphone.
- Start by making a list of everyone you “have” to buy a gift for. It may be useful to write in details such as items or the ideal stores to shop.
- You should then allocate a spending amount for each person on your list.
- Add up your estimates and make sure it does not exceed the overall budget
- Take care to have some wiggle room for accessories, such as, gift wrap, boxes, tape, and the cost of shipping if needed. Also, keep in mind, that Uncle Sam ALWAYS gets his cut.
For example,
Budget Total=550
Mom $ 30 sweater (Target)
Dad $30 socks, tie (JCPenny)
Ditch your credit card
We should leave our credit cards at home this holiday season. Please, do not join the 44% and take on debt to buy holiday gifts. Don’t cripple yourself financially to make banks and other institutions richer, with your hard earned money. The only exception to this rule is using your credit cards for the sole purposes of benefitting from a rewards program. This should only be done, if you intend on and are financially capable of paying off your credit card bill immediately and without interest. Out of the 44% of shoppers, who took on dept over the holidays, half of the consumers said, it would take them 3-5 months to pay the debt. Be honest with yourself. There is life after Christmas, don’t take on unnecessary debt. Use a debit card or the cash only method.
Use the holiday envelope system
The envelope system is my preferred method of shopping this Holiday season. Target gets me every time! I go in for one box of diapers and leave $100 poorer. Therefore, I’ve implementing the “envelope system”. I have stored the money for my total budget number in an envelope. If I purchase a toy for my girls from Target, I will remove the amount of money needed. When the cash is finished, I’m done. This prevents me from, aimlessly roaming the store and purchasing random items. I find that other methods of payments such as check, credit or even debit may give us a false sense of security .We have all over drafted our accounts and have had to pay those dreaded overdraft fees. Cash keeps me honest! For those who struggle to commit to budget while shopping, I challenge you to try the holiday envelope system.
For more reading on the envelope system check out these article below.
PrePlan Black Friday
You can find some amazing deals that will help you stay on budget, on Black Friday but you have to do your research. Know what you want and where to get it. Don’t make purchases just because it is on sale. Strategically research and plan for Black Friday according to your budget. The avid Black Friday shopper can create a micro budget, out of the overall holiday budget. Use cash and leave credit cards at home.
Focus on what Really Matters
Don’t focus on quantity but give from the heart. The Christmas tree does not need to be filled with gifts for a photo op. Give within your means with the best intentions. I learned this from an experience with our 3 year old daughter last Christmas. It was the first year that she started to understand the concept of Christmas. I was determined to make it special for her. Let’s just say, I made Santa seem quite generous.
She really wasn’t impressed by the amount of gifts; even the ones I thought would be a home run. She fell in love with a set a Peppa the Pig figurines I paid 10 dollars for. This is also the only toy she still consistently plays with. Everyone that comes to our home is introduced to Peppa and her family. I use this example, to emphasis, that sometimes less is more. We can use the holiday season to teach our children financial wellness. This year, I took her to the store and had her look at items she wanted to put her wish list. I reminded her that Santa has a lot of kids to bring gifts for, so she could only choice a couple of items. She’s been very vocal about the 1 item she loves the most. The amount of gifts under the tree is in no way reflective of how good we are as parents. If you have a tight budget, put a limit on gifts and do more family activities. Bake holiday treats, build a ginger bread house or go ice skating. There is so much that you can do as a family.
Get Creative about holiday gifts
If your budget does not allow for a conventional holiday gift, you can be a blessing in many other ways. Increase your list of “non conventional gifts” rather than expanding your budget. Gift giving comes in many forms, so get creative. For instance, if you love to bake, make an extra batch of cookies for a neighbor. Instead of giving gifts to your friends individually, have a potluck, enjoy time with each other. I have a friend, whose family has decided to go on a family vacation, rather than gifting how they would usually. Yes, the trip does cost money, but I love the emphasis on spending quality time and making memories, rather than focusing on gifts. If you play the piano or speak another language, offer a free lesson to a child of a friend or family member. Babysitting can also be a precious gift. The average pay rate of a babysitter is between 10 to 15 dollars an hour. As a parent I would graciously receive this gift. We should all keep in mind what really matters.
There you go, an awesome post by Mrs Breathe Easy Finance on how to save money and live better this Christmas to avoid the post Christmas blues. These tips are too good, they even apply to any holiday season.
At this point, I might just hand the site over or we might have to start a new blog for Mrs. She is doing such a remarkable job.
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Adebayo
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I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.
After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.
When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.
Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.
My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.
