Managing Your Finances Over The Christmas Season

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Christmas Season and Personal Finances

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The Cost of Christmas

Christmas is a time of joy, togetherness, and mellow fruitfulness. It is a time to forget the difficulties of life and look forward to a better future in the company of friends and loved ones. It is not a time when you want to have your happiness compromised by financial worries.

There are those who feel that Christmas has become over commercialized and is now a bottomless pit which sucks up more money that you can afford. Others feel that it is a time to open the purse strings and celebrate love and hope in a guilt free manner. Whatever your feelings may be, the fact remains that it is a time when additional expenses must be borne – some essential and some optional. Being able to manage your finances so that you have the money you need to celebrate as you want without worrying about expenses and the long term effect on your finances is the key to a worry free Christmas.

Plan Well in Advance

Christmas is not a new occurrence. It happens every year and you know when it will be. Planning your Christmas months in advance may seem odd and to inject a materialistic element into an emotional event. It may appear to be a cold act that kills the spontaneity of the season. But the reverse is actually true. With planning and monetary control, you can have a worry free Christmas that is full of the season’s blessings. After all, the three wise men brought gifts to the baby Jesus and this act was one of the main foundations of Christmas, the act of giving someone a surprise gift. Furthermore, you may know that you are receiving a gift but because it is wrapped, you do not know what is in the wrapping.

Begin by looking at all your expenses over the last few Christmases. You will not have detailed financial records, but you will know in general terms where the money went and why. Divide the expenses into 2 heads – essential and optional. The optional expenses are where you have some flexibility. Look at the money spent under each head over the last few years and see if there are any spikes – sudden increases in the money spent. If so, analyze why that happened and what you can do prevent it from occurring again. For example, did you suddenly notice how old and worn your curtains were looking and have to rush to change them before Christmas? Had you noticed and planned for this in advance, it wouldn’t have been a burdensome December expense.

Now that you have an idea of what your previous Christmases cost you and why, you can prepare a budget for this year. Your expenses will not be the same – prices have gone up, there are new friends to buy presents for, gas prices remain high when they should not be, same with energy costs, and so on. But you past expenses give you a base on which to build a realistic budget.

Balance Desire and Reality

Everyone wants the best of everything for Christmas. But you need to look at your Christmas budget realistically and decide on how much you can really afford to spend. Look at all you fixed costs such as mortgage payments, insurance premiums, groceries, utilities, gas (some of these already mentioned), etc. Total them up and see what you have left. If possible, make advance payments so that you don’t have to worry about these bills during the holidays.

Now look at any extra income and savings that will be available. Your Christmas bonus will be coming in; but will it? Are you sure? In this poor economy surrounded by dire financial straits? And if you are off from work for a week or two, you will be saving on transportation, parking fees, lunches, coffee, etc. Total up all this and add the amount to what you originally had available for Christmas. Are there any additional savings possible in the month before Christmas? A lot of people are forced to cut back on expenses after Christmas to recover from overspending. Why not consider doing it in advance in a planned manner that will involve less hardship and reduce your Christmas financial worries? Can you cut back on the usual weekend entertaining and eating out? Will shopping at discount stores and doing some bulk buying result in significant savings? This may not be your usual lifestyle, but if the money you save adds a reasonable amount to the money you have for Christmas, it is something that is worth considering.

The additional income and money saved can be added to your budget. Now to modify your budget so that funds available and expenses align. It may be tempting to dip into savings to cover a shortfall in funds, but this is an extreme step. If you feel you must do so, factor in how you will repair the damage to your savings over a period of say 3 or 4 months. Is it realistic and doable? If not, a few sacrifices may be the better option.

No matter how much you plan there will always be unexpected costs that will suddenly crop up such as finding your Christmas lights have gone bad and needing to buy new ones. Keep a 10% margin in your budget for the unexpected and use this only to cover what you have not planned for. If it remains untouched till Christmas day, you will have money for a surprise family treat or that last minute specialty present.

Spend Sensibly

Everyone wants to buy the best presents for the people important to them and they often know what people want. But if you can’t afford to buy the best, don’t compromise and buy lower quality presents. Buy something that is less expensive but is the best of its kind. Quality and the thoughtfulness you have shown in buying the gift will make up for not getting what was wanted.

Do you really need to stock 5 types of whiskey and 7 types of wine for guests? 2 good whiskeys and 3 wines are more than enough. The same applies to food – having a few options without compromising on the quality is fine. Guests will appreciate what they are offered and will not worry about the number of choices presented to them. And the savings can be considerable and be the difference maker.

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About Author

Benjamin is from Sacramento, CA. He has 2 master’s degrees and served 4 years in the U.S. Navy. He has worked at Wells Fargo Financial and has been investing in equities since 1995. He is a constant reader of finance articles and books related to business.


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CREDIT DAD is an independent, advertising-supported website. Many debit cards, credit cards and other financial offers that appear here are from companies from which CREDIT DAD Websites receive compensation. This compensation may impact how and where products appear on this website (including, for example, the order in which they appear). CREDIT DAD Websites do not include all card offers in the marketplace.