The Christmas season is a wonderful time of the year. It can be filled with
lights, parties, good food and good friends. It’s also a time that many
people exchange gifts with those they love. In fact it can be so much fun
that in all this revelry one often gets caught up in the moment and forgets
the basic principles of personal finance – specifically, what you buy, you
eventually have to pay for.
The truth of the matter is that such a great number of us go overboard on
Christmas shopping that the economy in general is crippled in the months
after Christmas while everyone scrambles to fix the financial mess they just
got themselves into. There are a few simple things you can do to avoid these
problems this year.
First, set a budget and stick to it. If you think you want to (are able to and
should) spend $1000 on gifts, travel and extra food this Christmas, then set
the budget now. The more specific you can be on the purchases the better
control you will have. For instance, let’s say you have 5 people on your gift
list and you expect to spend $100 each. You also expect to spend $250 more
on food and $250 on holiday travel. List all these out in a notebook, ledger
or spreadsheet. It can be part of your regular budget or a special Christmas
budget. Then track your expenses carefully on each one making sure you
don’t go over your limit.
Shop early for gifts. The earlier you can get started, the less of an impact
gift buying will have on your cash flow. If you spread your gift buying over
several months before Christmas you won’t experience the debts and negative
cash flow that last minute purchasing can cause. You will also make better
decisions and not panic and jump at over-priced merchandise.
Stock up on food bargains now. Christmas baking can eat up a considerable
amount of cash. If you stock up on grocery deals ahead of time you will be
able to save a large amount in the long run.
Lower the expectations. In the past you may have bought for too many
people or you may have been in the habit of buying big luxurious gifts that
you really couldn’t afford anyway. Now is the time to lower expectations for
the coming holiday season. Tell your usual recipients that the gifts will be
smaller, more meaningful, environment friendly, offer help to the poor, etc.
In our family we sometimes give monetary gifts to charity in lieu of gifts to
each other.
Use a waiting period. Forcing yourself to not buy something until you have
thought about it for a few weeks will help to avoid purchases that you may
later regret. If you are in the habit of impulse shopping, try the waiting
period. You may have to start by always shopping with a friend who you have
arranged with in advance to keep you in check.
Teach children to use their own money for gifts. Young children should be
taught to use money wisely from an early age. Help children save through
the year and then help them to use their own money to make gift purchases.
If you always buy gifts for children to give to others, they will never
have respect for the cost of the purchase. If they see their own savings
disappearing, they will quickly realize the less they spend the more they will
have.
Make your gifts. It’s amazing how many really nice gifts you can make
yourself with a little hard work and creativity. Depending on your experience,
the choices are almost endless. You can make crafts, woodworking projects,
plant indoor gardens, design jewelry, sew clothes, make pottery, construct
handmade dolls or puppets, etc., etc. These are just a few things that will
make your Christmas season merrier.
