Tis the Season. As many flock to the stores to purchase the latest gadgets for their families in celebration of the upcoming holidays, let’s not forget the reason the season. The holidays present a unique time when families can gather together in one place and spend quality time with one another. The memories that are created during this time will be remembered for a lifetime. Therefore, it is more the presence versus the presents that should be the focus. However, if you find yourself rushing to the stores to shop for your loved ones, keep these 5 tips in mind.
1. Create and Stick to a Holiday Budget- Set it and don’t forget it. Establish spending limits that you can safely apply toward holiday spending. Only spend after you pay all your bills and other obligations. Once your holiday budget is exhausted, you must be disciplined to stop spending. Don’t get lured into the last-minute sales and drive-bys to the mall. All sales are not created equal and sometimes a sale is NOT REALLY a sale. Check online websites, check cost comparison sites, use coupon codes, and use rebate sites to help you save money. The best deals are really after the holiday season in January when everything is marked down up to 80% off!!
I recently went shopping at a major retailer and was about to purchase a dress coat for my daughter for $84, I also had a coupon for 20% off. The coat was originally priced at $130, so after the coupon I would have paid $67.20 ($84*.80=$67.20), not bad for a designer coat. However, I decided to check the online price while in the store and to my dismay, the coat was marked down to $51.99, $32.01 ($84-$51.99=$32.01) cheaper than the $84 price in the store. When I got to the register, I informed the cashier about the price disparity and she honored the lower price. Yippy! So, recall I had a 20% off coupon, so I purchased the coat for $41.59 ($51.99*.80 = $41.59), a coat that was originally priced at $130, and one that I could have purchased in stores for $67.20. Due to my savvy shopping ways, I was able to save an additional $25.61 ($67.20 - $41.59 =$25.61) just for surfing the internet in the store!!
Save yourself the stress of waking up with credit card debt that you are stuck paying off throughout the following the year.Make your expenditures from your debit card that is linked to your bank account.
Keep in mind that when establishing your budget, you want to write down a list of all the people you will purchase gifts for and the amount you will spend on each person.Be sure to include a budget for decorations, parties, holiday travel, and charitable giving.If you have a budget from last year, you can use it as a guide when setting your budget this year.
One thing we do know, is that the holidays come around the same time every year.Therefore, you can get a head start for next holiday season by saving money throughout the year for the holidays and purchasing gifts throughout the year.
2. Establish a Dedicated Bank Account – Creating a bank account just for holiday purchases will do many things: help you track your expenses and keep you within your budget, keep you out of debt, and ensure that you are not spending money allocated to other day to day expenses and obligations.
3. Cut Back on Day to Day Spending – We all like to splurge on something from time to time. If you are dealing with a limited holiday budget, you may want to consider cutting back on the extra indulgences such as the overpriced lunches, eating-out, entertainment, and some other FUN items. If you would ordinarily spend $500 a month for eating out, consider spending $300 and using the extra $200 toward the Christmas budget. Same goes for spending on entertainment, if you would ordinarily spend $400 on entertainment, consider spending $150 and allocating the remaining $250 toward the Christmas budget. You can get creative and slice and dice as many budgets items that you have. The idea is to identify and reduce existing budget items to accommodate for the larger spending during the holidays.
4. Secret Santa – We have used this method over the years as I have many siblings and when you add the nieces and nephews, we are up to a family of about 20. We decided that each person would just purchase one gift with a set dollar cap and exchange it during the holidays. This has been a great budget saver to our family.
5. Give the Gift of Giving – Consider eliminating many of the high-ticket items or not gifting in the traditional sense at all and donating your time. Sometimes a gift does not have to be lavish and expensive. Something that you create from your heart can be just as rewarding and sometimes more rewarding. Consider making a craft item or keepsake and giving them to your loved ones. Or if you bake, consider making a cake or some pastries that you know your family will enjoy. Consider helping those in need during the holiday season and donating your time organizing a coat drive, donating to the local foodbank, serving at a soup kitchen, or simply donating items from your household.
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IRS Circular 230 disclosure: Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.
Disclaimer: Nothing in this document should be relied on and you should seek professional advice if you need tax information or advice. This publication should not be a substitution for personal tax advice as every tax situation is different. You should obtain personal tax advice from a Certified Public Accountant or other tax professional to address your specific tax needs.