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5 Tips to Rein in Holiday Spending
The overflowing expectations around the holidays can entice us to spend more than we can afford. Not only do we have bills to face once the decorations are put away, but 43% of respondents to an Experian survey say extra expenses also make the holidays hard to enjoy.
Now’s the time to plan so your December spirit doesn’t lead to January bills. We asked five experts on frugality what they do to avoid holiday overspending.
Recognize your triggers
Donna Freedman, author of “Your Playbook for Tough Times,” says you need to recognize your spending triggers. Are you trying to make the holidays more magical for your family? Can you resist anything but a great a deal? Knowing what drives your spending can help you stop. Here’s what she recommends:
- Carry your list with you even after you’ve finished shopping. When you see a killer deal or a gift that’s “more perfect” than the one you’ve wrapped up, use the list to remind yourself you’re done.
- Make a game out of spending little or nothing for a gift. Freedman likes things that represent “a stirring tale of thrift.” She uses one such gift, a vase with a hole in it, to keep money she finds — on the ground, in vending machines, wherever — for giving to charity each holiday season.
- Consider limiting children to four gifts, asking them to choose “something you want, something you need, something to wear, something to read.” It helps children set realistic expectations.
Work with a list
For Tiffany Aliche, aka “The Budgetnista,” step one is making a list of whom you plan to give to and how much you plan to spend. Make sure your gift budget fits into an overall holiday budget that accounts for shipping, decorations, food, travel and entertainment. Her top tips:
- Check that list twice. It’s easy to forget thank-you gifts for coaches, teachers, the letter carrier, party hosts. Decide what you want to give each person. Once the list is set, adjust it as you go to keep planned gifts and your budget in sync.
- Use technology. “Price-check online before you buy or go in a store,” Aliche says. Know your price range for every gift on your list and set up price alerts. One of Aliche’s new favorites is the Chrome extension Wikibuy, which looks for better offers as you shop online and applies the best coupon when you check out.
- Consider making an experience the gift. If you’re already planning a holiday outing with a group of friends, can you agree it will be a gift to one another?
Match your approach to your values
The blogger who writes under the pseudonym Mrs. Frugalwoods says her family’s frugality is “larger than the holidays.” She notes that while the season is “wonderful and it’s fun, it’s not an excuse to dip into your emergency fund.” Her tips:
- Decide what’s most important and spend accordingly. For her, it’s a family gathering. She hosts Thanksgiving and cooks from scratch rather than buying pre-made or going to a restaurant.
- Shop with gift cards or cash-back rewards. She prefers giving an item rather than a gift card but occasionally passes along gift cards that were given to her. It’s regifting at its finest.
- Let your values be your guide. She favors “small, reasonable gifts” and shopping locally.
Know the difference between cost and value
Mary Hunt, the author of “Debt-Proof Living,” blogs at Everyday Cheapskate. She says it’s important to understand that your credit limit is not a license to spend. Try these instead:
- Shop with cash only; leave your checkbook and credit and debit cards at home. Need more cash?See if you can cut your grocery bill temporarily by using up items in your freezer or pantry, or track down unused gift cards to fund holiday shopping.
- Know the difference between a gift’s value and its cost. A $20 toaster that you found on sale for $8 is still a $20 gift. If you budgeted $20 but paid less, that doesn’t mean you owe the recipient $12 more in gifts.
- Define “gift” more broadly. Can you give your expertise, such as setting up a website for a tech-challenged friend? Do you have a treasured possession to pass on? One of Hunt’s favorite gifts was vintage crystal that belonged to her mother-in-law: “She wrapped it up for me for Christmas and got to see me enjoying it, rather than just leaving it to me in her will.”
Plan for thrift
Having a plan is central to being thrifty, says Gary Foreman, founder of The Dollar Stretcher. “If you don’t have a plan, you’ll overspend,” he says, noting that some people don’t finish paying for Christmas until April or May. His tips:
- Subscribe to online price alerts so you’ll know about price drops for a specific item or for travel. (And unsubscribe later so continual alerts don’t tempt you to spend.)
- Regifting is OK, especially when you know someone will love something you can’t or won’t use.
- The thought really does count, and thoughtful gifts can be inexpensive. One of his favorite gifts came when his daughter tracked down an ethnic bakery to get him some kolaches, Bohemian pastries his grandmother used to make. “Once you have needs met, the gifts that make a difference are the ones that say the giver knows who we are. Those are the best and most memorable gifts,” he says.
How to create a budget (and why it’s important)
Everybody looks forward to payday, but when you’re living paycheck to paycheck, it can’t come fast enough. How many times can you squeak by eating pasta for dinner and praying your landlord waits an extra day to cash that check before you figure out that there must be a better way?
It may not be intentional, but living on the financial edge is incredibly stressful. If we told you there’s a more effective way to manage your money, that you’ll be able to see where you’re overspending and even start saving, would you listen? Well, pay attention, because creating a monthly budget is the answer and it’s not as hard as you might think.
Most people think a budget is about restrictions–and that’s no fun. That’s also not true. People at all levels of income use budgeting to as a way to maintain control in their lives. The reality is, you can do anything and go anywhere you want, as long as you understand your cash flow and plan ahead. It’s all about making wise decisions and prioritizing what’s most important. It’s about having a plan, and that’s what a budget is.
Creating a budget
There are 5 easy steps to creating and managing a budget:
Step 1: What are my goals?
Write down your short and long-term financial goals. Do you want to pay off your credit cards, buy a house, start a family, retire in 20 years, fund your kids’ college education? It can be any number of things, but you have to have to have a reason that fuels your efforts. Otherwise, you’ll lose your motivation.
Make a list and post them in a place where you’ll see them every single day. If you’re a visual person, create a vision board. Regardless of whether it’s a list or a group of pictures, it should serve as a daily reminder of what you’re working towards.
Step 2: Where SHOULD my money be going?
We know there’s no budgeting equation fits everyone’s situation, but some general guidelines have proven to help keep people on the road to reaching their financial goals. Ideally, your spending should be divided among fixed costs, flexible expenses, and savings.
Your fixed costs are the bills that are generally the same amount each month, (e.g., rent, utilities, phone, insurance, credit card payments, car payment, etc.). Shoot to spend no more than 50% of your take-home pay on these expenses.
Flexible expenses are those that vary. Things like entertainment, groceries, gas, gifts, and clothing fall into this category. Thirty percent of your take-home pay is what you should aim to spend in this area.
Your savings has to be a priority if you’re going to reach your goals. You remind yourself of what you’re working towards when you look at that list or those pictures every day. In a perfect world, you could set aside 20% of your take-home pay into a savings or investment account.
3. Where IS my money going?
If you’re living paycheck to paycheck and you want to save some money, you’re going to need to start living below your means. That’s pretty difficult to do if you don’t understand where your money is going now.
Make a list of all your recurring expenses last month. Then, add in all other expenses including restaurant bills, groceries, lattes, shopping, dates, movies, and that late night Uber. Finally, how much were you able to save last month?
With all of those numbers in front of you, you should have a much more clear picture of where your money is allocated during the month. And, if the answer to the last questions is zero, you know it’s time to start prioritizing your spending and looking for ways to cut costs.
4. Create your budget
Now it’s time to create a budget that works for you and your personal needs.
Apply the percentages against your monthly take-home pay for fixed costs (50%), flexible expenses (30%) and savings (20%) and compare those numbers against your current needs. Are they realistic?
In the beginning, they may not be, but that’s no reason to give up. Look for ways to reduce expenses and cut costs. Shop cable providers, cancel that Netflix subscription, cook dinner at home, work to pay off that high-interest credit card. You’ll be saving money by getting rid of the interest charge sooner than later. Just be sure to keep your other credit card payments current. Every change you make is progress, and it’s one step closer to your goal.
5. Track everything you spend
The only way to know where you spend your money is to track it. There are apps like Mint, HomeBudget, and BudgetBoss, to name a few, that are designed help you create your budget and track your progress from your smartphone, computer or tablet. It’s the last step in the budget process, but it’s the most important. Tracking keeps you accountable and is a huge motivator, but if you don’t do it, all the work you’ve done to get this far will gradually slip away and you’ll be more likely to fall into your old habits again. Whether you do it yourself or use an online program, make sure you track!
How to Set a Budget for Holiday Spending
You might have pumpkins on your porch, but it’s already time to make room for the year-end holidays in your budget.
“I was at Costco the other day, and I already saw Christmas trees, [so] we need to be thinking about it right now,” says Nick Givogri, a California-based regional executive for investment service Merrill Edge.
Here’s how to get started.
Your past holiday spending is the best indicator of what you’ll spend this season, says Robert P. Finley, a certified financial planner and principal at Virtue Asset Management in Illinois.
“Try to get your credit card statements,” Finley says. “Try to look at your bank statements. What did I spend on presents? Did I have to do traveling? Did I have to fly somewhere?”
Once you’ve estimated past expenditures, create a baseline for this year that includes what you can reasonably save over the next few months.
For presents, Finley recommends setting a total and dividing it by the number of people on your list. Then prioritize. “If you’re going to spend $1,500 and you have 15 people on your list, some of them you might want to spend more than $100, and others you might want to spend less, and then you can work that way,” he says.
But presents aren’t all you’ll buy. Account for decorations, travel, donations and more. And don’t forget to build in a miscellaneous category. It’ll give you extra cushioning in case a co-worker gives you an unexpected gift — and you feel compelled to reciprocate.
“It’s always better to have a little extra room or miscellaneous — and then you don’t use it and it goes back into savings — than maxing out, and then something comes along and you’re stuck pulling out of savings,” Finley says.
Setting a spending limit is just the beginning. Budgeting requires discipline and regular check-ins, says Richard K. Colarossi, a certified financial planner and partner at Colarossi & Williams in New York.
“If you don’t revisit it, what’s the sense in having it?” Colarossi says. “You have to match the actuals to your budget and see where you’re over and under.”
Givogri agrees. He suggests setting a weekly reminder on your phone to review how much you’ve spent and how much you have left to spend. If you discover you overshot the budget on a particular gift, there’s hope.
“Make an adjustment to the other gifts or make an adjustment to other expenses that you may have for the particular month,” Givogri says, citing strategies such as eating meals at home to save money in anticipation of potentially costly holiday outings.
And always keep your budget’s ultimate goal in mind. It might be focused on the months of November and December, but it will affect your finances well into the new year.
“When you do a budget and start setting aside some money now, you’re probably going to help reduce credit card debt,” Colarossi says. “Otherwise, if you don’t budget and have the money set aside, what’s going to happen? It’s going to go on credit.”
You don’t have to pay for your presents in cash, but you should have the cash to pay them off so you’re not left with hefty interest fees, Colarossi adds.
While you’re thinking about all the gifts you’re going to give this year, plan ahead and budget as a gift to yourself.
Budgeting 101: Creating a Budget & Sticking to It
With the total student loan debt in the United States hovering around a mind-blowing $1.23 trillion, it’s important to be smart about budgeting and managing your money while you’re in school so you’re not one of the 43 million Americans drowning in student loan debt.
Creating and managing a budget isn’t the most fun in the world, but it’s not as much of a hassle as you might think, either. Plus, it’ll help you stay on track during school and avoid graduating with heaps of debt.
For starters, you’ll want to figure out whether you want to track your budget per month, per academic semester (or year), or per calendar year. Once you’ve chosen a timeframe for your budget, you’ll want to decide what tool or tools you want to use to track it. You could go old school with pen and paper, or you might opt for using a computer spreadsheet, or maybe your phone is your life and you’d prefer to use a budgeting app. Georgia’s Own BALANCE Financial Fitness program offers free resources to help with budgeting, and we’ve also created a budgeting spreadsheet to help you track your income and expenses (download it for free here). I personally love Mint – it’s simple to use, secure, and automatically updates all of my accounts in one place. Whatever you choose, make sure it’s a tool you’re comfortable with and one you’ll actually use.
Here’s what you’ll need to create your budget:
- Your income: Be sure to include all sources of income, including wages, any financial aid refund, and any contributions from family.
- Your expenses: Expenses include fixed expenses like your cell phone or rent, as well as variable expenses such as dining out or gas for your car (if you have one). For your initial budget, you may have to estimate some expenses until you have a better idea of how much you spend on that category.
The next step is adding up your income and your expenses so you can balance your budget. To do this, you’ll subtract your total monthly expenses from your total monthly income. The goal is to have a positive balance, meaning you’re earning more than you’re spending. If you have money left over each month, you can save it or even start paying on your student loans (if you have any), since they do accrue interest while you’re in school. (Read more about why paying on your loans while in school is a good idea).
If your balance is negative, you’re spending more than you’re earning and need to adjust your budget. You can cut back on expenses or find a way to supplement your income, such as getting a second job.
Now that you’ve created and balanced your budget, there are two more important steps in maintaining that budget:
- Review your budget monthly – doing so will help you stay ahead and avoid surprises.
- If you make a spending mistake, don’t dwell on it. Next time you’re tempted to make an impulse purchase, ask yourself if you really need that item and if so, can you afford it?
Developing good financial habits in college (or earlier) not only helps you cut down on student loan and credit card debt acquired throughout school, but also helps sets you up for success later on in life. Trust me – things like credit scores and savings accounts may seem trivial now, but it’s a lot easier to start off strong than to find yourself in heaps of debt after school and trying to correct mistakes that could have easily been avoided.
Average Wedding Cost Reaches $35k
Thinking about having a wedding soon? Are you prepared for the cost? According to The Knot’s 2016 Real Weddings Study, the average cost of a wedding in the US is $35,329. The study goes on to say that weddings today are less about the bride and groom, and instead are geared more towards entertaining guests. From the venue to food, decorations, and entertainment, couples are providing guests with unforgettable experiences. Don’t let this number scare you — it’s just an average, so there’s room for you to spend less (or more).
If you haven’t started saving for a potential wedding, now might be the time.
RiseUp with an Inexpensive Super Bowl Party
Super Bowl LI is coming up this Sunday! With our hometown Atlanta Falcons making it to the Super Bowl for the first time in 18 years, all eyes in Georgia are sure to be watching the big game. If you’re wanting to throw an inexpensive Super Bowl party to watch with your friends, we know it can be hard work and has the potential to get pricey! But don’t worry, we can help you entertain your friends while making it easy for you and a bit easier on the wallet with a few tips.
Crockpot. Keep it easy and affordable by throwing something in the slow cooker. Soup or chili is a great game day food. Plus it can feed a lot of people and it’s relatively inexpensive.
Make it a team effort. If you’re hosting, it’s okay for you to ask your guests to bring their favorite dish or beverage. After all, you’re the one who has spent time cleaning and are letting people come into your home. Don’t nominate yourself to be in charge of everything!
Buy generic. Name brand chips and sodas are expensive, especially if you’re buying in large quantities. Opt for the store brands to save a few dollars!
Skip Decorations. Sure decorations are a nice addition, but instead of bothering with spending money on something that will likely get thrown away immediately after the game, leave them off the list. Plus it’s one less thing you’ll have to clean up post-game.
Seating. If you think you might be a little short on seating, ask your guests to bring a fold-up or tailgate chair with them. Or if you have multiple rooms with TVs, set both of them up.
Backyard Football. If you have an active group, split into two teams and have a little backyard football game. It’s an easy way to pass some time before the game. Involve the kids as well so they can burn off some energy!
Don’t let the thought of an expensive party keep you from enjoying the game with friends. Especially since our hometown team will be playing! Here’s a little something extra to get you ready for Sunday. Enjoy the game and Go Falcons! #RiseUp