Limit Red this Holiday Season to Santa’s Suit

Originally published November 2011 in Southern Neighbor newspaper, Chapel Hill, NC

by Todd Washburn, CFP^®



It’s November, so it must be holiday time.  I have in the past written January articles about how to recover financially from holiday spending, but I thought this year we could try to avoid the need for that article. It’s been a year of hard times, the most recent of several.  Many folks are out of work and many others are nervous they may join them.  So, while it’s always important  to plan your holiday spending, this year it might be especially so.

  The “Holidays”- Thanksgiving, Christmas, Hanukah, etc.- can be times of Joy, Stress, Eating/Overeating, and of course Spending.  We connect with family and friends that we may not the rest of the year. We want to be generous and giving.  All of which can be joyful, stressful, expensive, or some of each.  There will be plenty of articles dealing with stress and overeating, so I’ll focus on managing your money.

  A couple of things happen once the holiday season starts- we get busy and we get excited.  Unfortunately both can be bad for your wallet.  That’s why it’s so important to plan now, before you get distracted.  I want you to succeed so let’s keep it simple.  While I can’t guarantee easy- there will be all kinds of temptations to lead you astray- keeping it simple may make it easier to stay on track.

 Here’s my five step process for avoiding paying for the 2011 holidays in 2012:

1.    How much can you afford to spend on the holidays (Thanksgiving, Christmas, etc.)?  Given what you’ve saved so far and what you can save between now and December 31, how much do you have?  Be honest and be realistic.

2.    What do you need or want to spend your holiday money on?  The list can be long, but typically there are three main areas:  travel, gifts, food/parties. 

a.    Travel:  What will your travel costs be?  Gas, plane tickets, hotels, meals while traveling, entertainment while out of town, etc.

b.    Gifts:  Who do you want to buy gifts for?  Who do you have to?  Who’s optional?

c.    Food/parties:  What will that Thanksgiving dinner and/or holiday party cost?

3.    Allocate your available money from #1 above.  First subtract your Travel expenses.  Then subtract your Food/party costs.  What’s left is what you have for Gifts.  I’m afraid there’s someone reading this who’s just realized there isn’t anything left for gifts.  Please read on.

4.    If needed, adjust your goals and habits.  I deliberately left gifts for last because we tend to think of them first and spend there first (without regard to the other items).  Then we wonder why we overspent.  If your gift budget isn’t what you expected,  please consider the following:

a.    Can you decrease your travel expenses?  Drive instead of fly, one trip instead of two, stay with friends/family rather than a hotel, etc.  Be creative.

b.    Food/parties:  Pot-luck?  Fewer guests?  Maybe Thanksgiving or a party but not both?

c.    Gifts:  Are you buying out of habit, obligation, or because you want to?  Can you spend less on each or less on some?  Maybe some of them wouldn’t mind a break this year either.  Consider a gift of your time or talents.

5.    Write down your spending goals AND carry them with you throughout the holidays.  Refer to the list when shopping.  Refer to it when traveling.  Make it a game, a challenge, to be creative and frugal, to give meaningful gifts and throw enjoyable parties without going into debt.

Why go to all this trouble?  There’s nothing joyful in the stress of large bills in January from overspending in December that you can’t pay off until June.  There just isn’t.

And with that, I wish you Happy Holidays!