Rather than feeling shocked by a massive credit card bill in January, plan ahead and be smart about how you spend money.
For many people, the holiday season can be a financial rollercoaster. It’s tempting to spend, spend, spend in order to make the holidays live up to that ideal image of what it should be, especially if you have kids, but then it takes months to pay off the massive credit card bill that comes in January. At that point it hardly seems worth the cost. In order to keep things under control, it’s important to take a few sensible steps.
Establish what is a holiday tradition and what is a habit.
There are many things we do during the holiday season that are rooted more in habit than in tradition. We engage in certain activities that somehow end up sticking around for the long term, even if they don’t make sense or are not enjoyable. You can change that by having an in-depth conversation with family about what really matters to you. Some people love gift exchanges, others find them onerous. Most people want to entertain and be surrounded by family. The most important thing is to have this conversation in order to weed out habits that are more money-sinks than they’re worth. (In my case, that’s mailing out Christmas cards this year.)
Make a detailed list of everything you will spend.
Go beyond the usual gift list because there are far more expenses that often get forgotten in the shopping craze. These include hostess gifts, alcohol, increased groceries if you’re entertaining guests, gas or airfare to visit relatives, Christmas tree and decorations, increased personal grooming and upkeep costs, stocking stuffers, etc.
Make a budget and stick to it.
Easier said than done, I know. Another approach is to save throughout the year, allocating money periodically to a special bank account that gets drained in December. That way you pay cash instead of facing massive credit card bills in January.
Discuss alternative gift-giving rules with family.
There are many different ways in which to give gifts, such as drawing names, doing a $5 gift challenge, buying only for kids, limiting purchases to thrifted items, allowing only homemade gifts, etc. Consider allocating gifts elsewhere, such as a women’s shelter, food bank, or charity that disburses funds according to need.
Seek out experiences instead.
It can be really hard to transition from physical gifts to experiential ones, since it somehow doesn’t feel as real – but keep in mind that experiences are the things we remember long after the physical gifts have faded in memory. Experiential gifts don’t have to be fancy; it’s more about creating an atmosphere that people will associate for a long time with that holiday.
When I think back on my childhood, there are a few lovely handmade wooden presents from my parents that I remember clearly, but it’s mostly the experiences that stand out in my memory, such as a surprise horse-and-sleigh ride, skating on an outdoor rink, reading in front of the fireplace, singing carols around the piano.