Thanksgiving is late this year, which translates into a loss of 6 shopping days between Thanksgiving and Christmas. Retailers are responding by kicking off holiday sales and promotions earlier than ever — some are starting before Halloween! Extra discounts are always welcome, but this extension of the holiday shopping season could easily lead to overspending. To avoid post-holiday bill blues in January, Jill Valentini, Assistant Vice President & Retail Branch Manager, Fidelity Bank in Dunmore, offers a few strategies on making a holiday budget, checking it twice, and sticking to it. With a little creativity and determination, it can be done. Here’s how:
Step 1: Be a financial elf, and make a holiday budget.
Like so many things, successful holiday budgeting starts with a good plan. Here are a few key categories to include:
The gift of time: A good way to avoid overspending on gifts is to set realistic expectations, and limits, and be creative in the process. “Do we all want to buy a Cadillac for our mom? Yes! But all she really wants is to make Christmas cookies with you and the grandkids, or to spend some time with you,” Jill said. “While a gift is nice, the gift doesn’t always have to have a dollar sign attached to it.” The gift of time can be priceless.
Embrace teachable moments: Include the kids in the budgeting process because it teaches them good habits for the future, and it will enhance their understanding of the value of a dollar.
Create the tradition instead of the gift: Jill has discovered that the children in her family love winning small prizes in “Minute to Win It” games on Christmas Eve even more than receiving one large gift on Christmas morning. It’s a tradition she started a few years ago that is both fun and economical. More importantly, it gives their family quality time together. Prizes are small items such as hair barrettes, socks, or fancy pencils. Google “Minute to Win It games” for a list of ideas.
Be creative, and get crafty: Don’t overspend on high-priced wrapping paper and ribbon from department and big box stores. Instead, explore the options at local dollar stores, and consider DIY wrapping. This is a great opportunity to involve children. They can paint or draw on brown or white paper and design their own custom wrapping at a fraction of the cost of buying high-end gift wrap. The added bonus: kids will enjoy unplugging for a few minutes and spending quality time on a hands-on project with parents, siblings and friends. Recipients of these specially-wrapped items will appreciate the extra time and care that went into their gift, too.
The gift is the wrapping: Another way to save on costs without sacrificing the overall presentation of a gift is to use part of the gift itself as the wrapping. For example, a blanket or shirt can be tucked around a book and tied with ribbon to eliminate the need for wrapping paper.
Go digital: Buying and mailing traditional holiday greeting cards can be costly. Consider sending e-cards to friends and family. There are countless options to design cards online, at no cost.
Paul Bunyan it: Those who opt for live Christmas trees may discover substantial savings when they cut their own trees on the farm instead of purchasing pre-cut varieties in a tree lot.
Clip those coupons (so to speak): Be sure to include the cost of seasonal plants, such as poinsettias, new wreaths, decorations, and ornaments in the budget. Also, look for specials on these items by doing online research and downloading apps to find the best prices and stay within budget.
Step 2: Make a gameplan before shopping.
Jill suggests approaching holiday shopping just as a regular trip to the grocery store. Make a list, create a budget, and look for the best prices. This mindset can help to combat the fury of glittery marketing campaigns designed to encourage big spending.
Another helpful tool in Jill’s holiday budget toolbox: keep a file of all gift receipts from the previous year handy. These records serve a dual purpose: 1) as a baseline for this year’s holiday budget, and 2) as a way to keep an accurate list of gift recipients, charitable giving, and upcoming events. If paper files aren’t appealing, create digital files, or find an app online. There are plenty of great options to help people organize and plan holiday budgets.
Step 3: Pay in cash.
To avoid a deluge of bills in January that may linger for months, Jill advises to leave the credit cards behind when it comes to holiday shopping. “Christmas is cash,” she said. “When you have cash in hand and you go shopping with a plan, you know you only have this dollar amount to spend on this gift. If you don’t have your credit cards with you, you can’t buy it in that instance.” The cash strategy is a great way to avoid the temptation of impulsive purchases and overspending. “You can also give yourself a little cushion of cash for the ‘what ifs’ that can come up, but I would reserve that cushion for the one-off gifts,” she said.
The cash strategy applies to online shopping, too. Instead of paying with credit cards, use a debit card, and keep a copy of the holiday budget handy. “In this world, everything is one click away,” Jill said. “This is going to be your toughest challenge. You have to restrain yourself. Try to just visit the sites where you know the sales are going to be, just like you would in the store. Then make sure you’re paying for the online items with your debit card instead of your credit card that way you’re still using cash.”
Step 4: Think ahead.
For those who are just starting to consider holiday spending, don’t despair. Follow as many of the strategies above as possible, and keep the other tips in mind for next year’s holiday budget. October is the perfect time to plan because a new year of deposits into Christmas Club accounts begins in late October.
Fidelity Christmas Club accounts allow customers to automatically transfer a designated amount from their paychecks into Christmas Club accounts each week, starting in late October. In mid-October of the following year, funds are transferred from Christmas Clubs into checking accounts, or checks are mailed, depending on the client’s preference. This is a great system for anyone who wants to prepare a holiday budget and shop with cash. Another option is to open a savings account, and reserve those funds for holiday spending. Consult with a banker to find out which option is best, and start saving for next year.
Step 5: Know when to call an expert.
“If you do find yourself in the situation where it’s October and you’re still paying for last Christmas, then you really need to evaluate and scale back what you purchase this year,” Jill said. “Then talk with your banker about a consolidation loan so you can start to pay down that debt.”
Fidelity Bank has multiple local branch offices throughout Lackawanna and Luzerne counties, and our full-service Customer Care Center is at your service 7 days a week. Call or visit your local branch office today.
Daniel J. Santaniello, President and CEO, of Fidelity Bank, publishes Financially Fit with Fidelity, your guide to financial well-being, every Thursday. If you’re interested in a financial topic we haven’t yet covered or want to subscribe to our emails, please feel free to drop us a line at blog at fddbank dot com. We would love to hear from you.