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Paycheck Chronicles

Christmas Planning In January

Today, I want to talk about Christmas.  Specifically, next Christmas and how you are going to pay for all the expenses that come with the holiday season.  Yes, I know it is January.  And yes, I know that you might be facing the bills from last Christmas.  But stick with me here.

November and December are expensive months for almost everyone.  Regardless of your religious beliefs, most Americans celebrate Thanksgiving, and there will be holiday spending even if you don't do Christmas, Hanukkah, or Kwanzaa.  Chances are, that spending will be more than you can just absorb into your monthly budget.  You don't want to dip into savings or go into debt.   So, you've got to plan ahead.  And what better time to plan that right now, when last holiday season is fresh in your memory and you might even be getting credit card bills for the expenses?

How Much Money Do You Need?

First, make a list of every single extra expense that you had last year.  Here are some ideas to get you started:
  • Thanksgiving dinner items
  • baking ingredients
  • holiday cards and postage
  • special outfits
  • tape, gift wrap and ribbon
  • Christmas tree and decorations
  • teacher gifts
  • other household decorations
  • New Year's Eve entertainment
  • extra childcare while the kids are off school
  • family photos
  • dry cleaning
  • hostess gifts
  • babysitting
  • gifts for friends
  • tickets to holiday entertainment
  • charitable donations, including purchases such as Angel Tree presents
  • turkey, ham, roast beef for the main meals
  • any special family traditions (our family does gingerbread houses)
  • extra electricity for those lights
  • family gifts
  • plane tickets or gas for travel, hotels, and meals when traveling
  • postage
  • tips for people who provide you with service throughout the year
  • entertaining food and drink
  • pet boarding or care, if you
Obviously, not everyone will have every costs.  Figure out what you spend last year, and guesstime how next year might be different.

Now, you have 10-11 months to figure out how to pay for this.  The idea is to have the money before the spending even starts.  How are you going to make this happen?  Here are some ideas:

Open A Special Savings Account

There are a couple of ways to do this.  You can open an additional savings account at your regular bank, or you can open an account at another financial institution.  Some people find it easier if special savings are hard to get.  For several years, I had a separate savings account at a bank where I did not have a debit card or online access.  In order to get to the money, I had to physically go to the bank, and it was not near my house.

You can also open an account that has an automatic savings feature, like a Custom Club account with Navy Federal Credit Union or a savings goal at Smarty Pig.

Figure Out Where The Money Will Come From

Is this level of savings something that you can take out of your regular monthly budget?  For many people, the answer is no.  Other options include decreasing expenses or increasing income.  The internet is awash with ways to cut costs or make a little extra money.  Try one.  If it doesn't work for you, try something different.

If you get any surprise or extra income that isn't already allocated, put it towards your holiday savings goals.  This might include extra hours at work, an unexpected refund, or the proceeds from a yard sale.  Do the same thing if you have lower than anticipated expenses, such as the spring and fall months when your utility bills might be lower.

Be Creative

Some people do better with creative ways to save.  If this is you, embrace your flair.  Perhaps you'd rather try to fill a huge jar with quarters, or buy a gift card each paycheck and hide it in your sock drawer.  Maybe you're super-visual, like me, and you need to make some sort of chart or marble jar or a paper garland.

Another idea is to make a contest with yourself. See how fast you can come up with the amount that you'll need. Can you do it by October? How about August? Maybe you want to challenge a dear friend or relative to save your Christmas budgets.

I know it sounds a little crazy to be worrying about Christmas in January. Being able to roll through the holidays without financial worries is worth the energy right now. Even a little baby step today will make next November and December better.

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