Financing your Christmas fun

For 2019, industry experts expect the average American to spend $942 per person on holiday gifts, up from $885 in 2018 and reaching a total of more than $1 trillion in holiday spending.

Investopedia

As much as Christmas is about family and friends and spending quality time together, it is no cheap endeavor. Investopedia says $942 per person is spent buying gifts. Clearly this will differ based on where you live but it highlights how costly the holiday season can be. In addition to gifts, we also have to factor in things like food and travel and decorations. When you add it all up, it really can be quite an expensive affair. And with the effects of the pandemic still with us, our usual celebrations may be hampered by economic hardships.

Photo by Pixabay on Pexels.com

Depending on how you normally celebrate the holidays, you may have a short or long term saving strategy to get you ready, but if not, I will share some strategies with you. Before you get to saving:

  1. Make a plan – First of all, you need to know what your holiday celebrations will look like. How do you want to celebrate the season? Make a note of how you’d like to celebrate and what your celebrations will entail.
  2. Create a budget – This may seem like casual, clichĂ© advice but give it a try. Refer to the plan you made and and start thinking about what it will cost you to make it happen. So if you are travelling to family overseas or across the country, you will need to budget for travel expenses and possibly accommodation expenses too. If you are staying home, you may need to budget for dinner and decorations and little repairs around the house.
  3. Set priorities – Now that you have a rough budget working with, highlight the expenses that are most important to making your holiday a success. These are your necessities and take priority in case you run low on funds.
  4. Create a funding plan – Now this is where the saving comes in and this is generally the most challenging part of the plan. You will have to identify how you will fund that plan you created in step 1.
    • Set a little aside each month as soon as possible. If you know in advance what you’d like to do, its a great idea to start saving as soon as you can. This is also a great tip, if you dont yet know what you want but you want to be able to splurge without worry. Have a dedicated account if possible, where you put away some funds each month. By the end of the year, you could be well on your way to being able to celebrate as you’d like. Though not the intended purpose, it may also serve as a back up in case of an emergency. The aim is to move the money out of your primary account to a place where you cant/wont touch it until the holidays.
    • Earmark a portion of any overtime or bonus earnings. Doing this means you wont take anything away from your primary source of income. Your Christmas funds will come from the extras (assuming you arent using these earnings to cover your regular monthly expenses). The risk here though, is that overtime and bonuses are guaranteed so if you rely solely on these means, you may not be able to hit your budget. On the flip side, overtime and bonuses may present an opportunity to earn in a way that regular hours wont.
    • Spread out your spending (where possible). Rather than having one big expenditure at the end of the year, space it out into more manageable chunks. For example, stock up on non perishable grocery items through the year, buy and freeze fruit when they are in season, buy gifts throughout the year, buy airline tickets months in advance, etc. Utilizing this approach also allows you to take advantage of sales and discounts that happen before the start of the holiday season.

With many of us reeling from the effects of the pandemic, holiday celebrations seem like a distant possibility. Many people are without jobs or have had their incomes reduced or are sinking further into debt. Many people are facing evictions! Celebrating is far from their minds. But if celebrating is on your radar, know that there is still time to prepare. And even if things arent as grand as they were in previous years, you can still make it special.

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