The weather outside is frightful, and so are the impending financial implications of the holiday season.
Gifts for family and friends, gifts (formalities) for your coworker acquaintances, holiday trips to visit winter destinations or long-distance family—not to mention just the normal expenses you’re used to, such as rent, utilities, food, and any recurring monthly entertainment expenses.
With all of these potential money eaters at play, it can be easy to lose track of where your checkbook’s been.
To avoid waking up January 1 to a dismal figure in your checking account and a crushing sense of defeat that destroys your chances of sticking to your New Year resolutions, follow these tips to get ahead of your holiday expenses and form a plan for where your money’s going.
Figure out your working capital
This is really a business term, but the concept itself still works when applied to a person’s personal finances. Those bills are still due on the first of the month, so in order to make a proper holiday budget, you have to know what funds you’ll actually have left once all your usual financial responsibilities are accounted for. Make a list or use a financial planning tool—or even an actual financial planner—to know what your costs are minus the additional holiday spending.
Make a realistic budget and stick to it
Once you have an idea of how much money you have to actually work with, create a list of the additional expenses you anticipate. This includes all the people you need to get gifts for as well as the maximum amount you feel you can dedicate to their gifts. Be realistic. Most of us want to spoil the people we love, but remember that it really is the thought that counts. You should not put yourself under financial duress for the sake of a short-term gesture.
Don’t forget about expenses other than gifts, either. This includes any special trips you’ll have to take, any special holiday parties you’ll have to go to, and any holiday entertainment you’ll have to pitch in for. If you realize you can’t afford something, maybe it’s time to re-evaluate your plans and eliminate one of your anticipated expenses.
Once you’ve created this budget, stick to it. If it helps, leave room in your budget for unexpected costs or for some leeway with your individual gift budgets. Ultimately, you’ll be happy you did this when you start the new year with a strong bank account and a certain resolve.
And now that you’ve worked so hard to create a budget and work within it, you can keep the financial smarts going by getting together with a wealth management expert who can help you continue to make decisions that will positively impact your personal finances.
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