Holiday spending without the hangover

The holidays are just around the corner, and with the holiday feasts and fests comes holiday spending. If you want to have a happy holiday that doesn’t leave you holding your aching head when the bills roll in come January, start planning early. The longer you wait, the more you’re prone to give in to stress, make impulse purchases, blow your budget or even buy a lame gift.

Look at your holiday spending as you would any other big-ticket item. While you’re splitting the cost among a variety of expenses, the bottom line is still the same – you’re spending a lot of money in a short period of time.

In the best of all worlds, you would have started saving for your holiday spending in January. Yes, you would have made it a budget item and set aside $10, $50, $150 a month so when the season rolled ‘round, you’d be ready. After all, it’s way easier to set aside $100 a month than to come up with $1,200 all at once. This is how I do it, and come August I start keeping my eyes open for “deals” on things I know my friends and family will love.

If you can’t do that, start here, with this holiday spending plan:

• Write down the amount you want to spend in each category of holiday expenses. Gifts are only the beginning. Don’t forget to also account for travel costs, postage and shipping, decorating, greeting cards, entertainment and photos.
• List the people you plan to shop for under the gift category, then divide up your budget accordingly. Limit your budget to what you can afford right now and avoid a financial hangover in the new year. If you spend $500 on a credit card at 18 per cent interest, and pay the minimum each month, it will take you seven years – and cost $365 in interest – to pay it off. Consider setting a dollar limit on gifts, or drawing names among extended family, roommates or co-workers.
• Comparison-shop for gifts online before heading to the store. You may find a better deal, and many retailers offer free shipping.

A dash of planning and a dab of creativity can help you keep entertainment costs down:

• Invite guests to bring something to share at a potluck dinner.
• Serve brunch, throw a finger-food party or host a wine and cheese tasting instead of a full-blown turkey dinner.
• Co-host a party with a pal or sibling, and share the cost.
• Make sure you set a dollar limit for your soirée. And list the items, ingredients and décor you’ll need and how much each will cost.
• The best gifts don’t have to cost money. If you’re financially challenged this year, make a coupon book to offer up your time baby-sitting, cooking meals, house cleaning, massaging, knitting, transporting, or whatever else you’re good at.

With this holiday spending plan, you don’t have to worry about starting the new year with a financial hangover. Happy holidays!