Want To Stop Going Into Debt For Christmas?

paper bags near wall

The simple way to fund your holiday shopping

 

Does the holiday season catch you by surprise every year?

Black Friday through Cyber Monday has become a major shopping event. Marketing starts in October for not to be missed savings opportunities. We are used to the marketing and even spend lots of time complaining about how early stores begin playing holiday music. Even with the fixed calendar dates for the Christmas shopping season embedded in our minds, many people still manage to get caught by surprise.

You will often see people splurging on “deals” during black Friday. Followed by even better deals on cyber Monday and even more spectacular deals on Christmas Eve. All of this shopping leads to the average American going over their spending limits. Often by hundreds of dollars. When this happens they are usually adding to their debt by charging these purchases on credit cards. All is well until January rolls around and the bills start stacking up. However, with a little advance planning it is possible to break this cycle.

Why should you plan for holiday shopping?

You should have a plan for how to spend your money for gifts to avoid overspending. This may seem like a simple thing to do but for many people this requires a mindset shift. We have been programmed by marketing companies that the best way to show we care is by how much we send during the holidays. People begin counting the number of gifts under the tree instead of the thought behind the gifts. We are even seeing people going into enormous amounts of debt for Christmas. It is not uncommon for people to still be paying for the previous holiday gifts well into June.

Creating a spending plan creates boundaries in your mind which forces you to be more intentional with your spending. If you know that you only have $25 to spend per niece and nephew, for example,  you will become more creative with your purchases. Shopping actually becomes an adventure instead of a chore. If you need help identifying and improving your financial mindset my previous blog post on this subject has simple actionable steps that can help.

 How to create a savings goal

Below are a few easy steps that you can take to prepare your budget for Christmas:

  • Decide on a shopping limit: In order to get an accurate total look at bank and credit card statements from the previous year to see how much you spent.
  • Create a list of the people that you will be buying presents for: Prioritize this list with your significant other and children first then add in extended family and friends.
  • Breakdown your shopping limit: Breaking your limit into bite-size pieces will help you avoid being overwhelmed. If you are having a hard time saving $100 normally  it will seem impossible to save $500 for holiday shopping without a plan. 

Want a simple way to stick to your goal?

According to the National Retail Federation 33% of Americans expected to spend $1000 for Christmas gifts in $2018. This figure was up from an expected spend of $900 in 2017.  With so many households reportedly living paycheck to paycheck this means that most people are putting these expenses on credit cards.

Wouldn’t you like to be able to stick to your overall budget and pay cash for your holiday gifts? I have created a free 90 day Christmas Savings Challenge that you can use to save $500 by black Friday. Saving for items in the future is difficult for most people without some sort of accountability and a visual reminder of their goals. This is why vision boards are so popular and effective. With this tracking sheet you will be able to track your progress each week as you save.

Where to stash your cash

Now that you have your tracking sheet where should you keep the money you are saving? You can save the cash is an envelope or jar at home but you run the risk of dipping into it for non-holiday cash. I recommend opening a separate savings account. It could be either online or at a different bank than your main bank. The reason behind this is that you make your money a less accessible. Online savings accounts, like Capital One 360, are a great choice because they are free to open and maintain. Set automatic transfers from your primary account to this savings account each week. Automating this process will significantly increase your odds of meeting your goal. Don’t forget to add this weekly amount to your budget as well.

I have set the amount for this 90 day Christmas Savings Challenge at $500 but you can save for any amount that fits your shopping goals. If your goal is $700 then you would divide that up into 12 equal parts which would mean you would save $59 per week. This will give you $708 at the end of the challenge. The amount is personalized but the act of tracking will keep you motivated and more likely to achieve your goals. If you start planning now you can have a cash Christmas this year. Join the adventure of having a cash Christmas and get your tracking sheet today!