It’s the most wonderful time of the year. There are parties for hosting, holiday lattes for toasting, and credit card charges aplenty. #RealMoneyTalk: it can be easy to get caught up in the holiday haze. Presents for your family, a new ugly sweater for the ugly sweater party, a box of Sees Candy, and five caramel mochas later, you may find you’ve put yourself into a $pending coma.
Christmas is a source of terrible spending habits for me. In fact, one of my favorite memories as a kid is also a big indicator of the money habits I developed as an adult. My parents took my sister and me on a special trip to Los Angeles when we were young. They took us to the mall, handed us $60 each and basically said, “Okay – go!” And we ran off and did Christmas shopping, having a special meet up time and location identified to check in (and maybe even give us a little more cash if we weren’t done). It was so much fun and kind of every kid’s dream… in fact, I get a spike of endorphins just thinking about it. But their good intentions for a Christmas shopping experience probably aided in my need to spend to feel good during the holiday season.
But there’s no need to overspend this holiday season! While January is known for being a holiday recovery month, you can avoid the fitness craze if you don’t go too wild in December. It can be easy to avoid the holiday financial fatigue once you know how to start. Here are a few of my favorite ways to stay festive without sacrificing my debt-to-income ratio.
Make a List and Check it Twice
During the holidays, people can become overwhelmed with all of their “responsibilities”. Often times you can feel obligated to attend every holiday party you’re invited to or give an expensive gift to everyone you’re close with. But #RealMoneyTalk: you’re not going to be able to treat everyone and have a nice credit score too. The fix? Find some areas where you can cut back.
Start by making a list of all of your responsibilities this season that will cost money — parties, gifts, vacations, etc., and figure out an estimate of how much each will cost you. Once you’re done, ask yourself do you really need to spend that much? The answer is likely no, and that is when you start trimming. Instead of calling a Lyft alone to your friend’s holiday party try using their shared ride feature and carpooling with someone to save costs. Get creative with your gifts this year — store-bought items come at a premium, see if there are any that you can DIY. And if you have to put money on your credit card, give yourself a hard limit of how much you can charge this month.
Once you’ve developed your plan of action on how to tackle these holiday expenditures, remind yourself to revisit the list in the next coming weeks. This isn’t a one and done exercise! Put your holiday spending plan on your fridge, bedside table, or Mint App so you don’t forget about it and can set yourself up for success in the new year. Reminders like this are one of my favorite ways to hold myself accountable. Try to check-in after each event or shopping excursion and see if you’re on track or need to re-adjust. That way you can save your wallet some heartache before your January statements arrive.
The Perfect Credit Score and Perfect Gift
When you find the gift that is practically perfect in every way, sometimes it’s easy to justify spending an exorbitant amount of money just to see the recipient’s face light up with joy. But then when you see the bill of how much you really spent, your face might be the opposite of joyful.
Remember that everything you charge on your credit card is essentially adding to the loan you have with your credit card company. One financial tip that has always stuck with me is — only charge something if you know you have the money to pay off the price of the item in full that day. This way I don’t go crazy thinking that I have thousands of dollars just waiting to be used on my credit card.
Try using your credit card this month just to manage your cash flow, as opposed to your lifeline to buy gifts. You can also have #RealMoneyTalk with your friends and family to set expectations for gifts this year. Keep in mind that it’s never the amount of money you spend on a gift that makes it perfect but the sentiment behind it.
Festive and Free
Raise your hand if your friends and family always spring last minute trip or weekend plans on you during the holidays. Same! I personally love that my friends are always coming up with fun and festive activities for us to go do but often times their plans involve a lot of money. Yes, the ice skating pictures are cute for Instagram, but the interest racked up on your credit card bill can ruin the cute factor.
Instead of paying for all of your holiday festivities try suggesting free or affordable activities to your friends when they want to get into the holiday spirit. Get some hot chocolate and go see the Christmas lights in your neighborhood, or stay in and watch your favorite holiday movie at home. There are plenty of ways you can stay festive without breaking the bank, the first step is feeling empowered to say — #RealMoneyTalk: can we do something that’s free instead?
The holidays are one of the most magical times of the year, but don’t let all of the glitter and tinsel distract you. Remember that sticking to your financial goals is the best gift you can give yourself to make your January more enjoyable.