A WORD FROM THE AUTHOR: I hope everyone had a happy Thanksgiving! With November coming to a close, we’ll need to start thinking about gifts and the holidays. This edition speaks to how to establish a solid budget guideline for the season and how to hold yourself accountable when reading. I hope you enjoy and share!
December is coming fast. What that means is that your wallet will be seeing the effects of gifts for the better or worse. Whether you come from a small or large family, everyone is expected to give gifts during this time. Below are some solid tips I’ve gathered throughout the week to help you make the most of the season without giving up your holiday cheer.
Establish budgets through gifting traditions
When to ideally start thinking about the holiday season
Cash is king (for you)
Establishing Budgets
Last year, I was helping a friend through her personal budgeting over lunch. She laid out everything for me across her income, savings, debt, and personal spending habits. One question caught me by surprise. She asked, “Hey Jordan, how do I save for the holidays? I have to pay most of my debt but I know that won’t happen with the holidays coming up. Should my wallet continue to feel the strain?”
This question caught me off-guard because holiday gift-giving was the last thing I’d think about when trying to get out of debt. From Ramit Sethi’s book, I Will Teach You To Be Rich, here’s how I approach this question.
You should start saving for your events as soon as you can. Don’t delay the inevitable. Instead of taking a larger chunk of your paycheck in the last part of the year, try saving earlier starting in the summer (or, dare I say, at the beginning of the year). The idea here is that some of life’s events are unavoidable like weddings and the gifting season. If it’s unavoidable, why wait until the last minute? Keep an eye on your savings account and make sure you establish budget limits for your family.
Another idea here is to also participate in White Elephant or Secret Santa. Ideally, this would have you purchase one gift (comical or not), and save you dollars from having to buy multiple gifts in a socially acceptable manner. You’ll first have to get your group to setup the gifting game first, but your wallet will thank you in the end.
When to Budget for the Holidays and How
As mentioned in my last tip, you should ideally start thinking about your holiday budget during the summer months. From there, you’ll need to stash a small part of your paycheck (or write it down in my case) into a savings account and you’re unable to touch that money until the gift giving season comes around.
This prevents from having to spend all of your December paychecks on gifts for loved ones and keeps you able to spend on your own essentials as well. This advice comes from our ability to procrastinate but you’re better off facing this situation headfirst. If you haven’t already started savings for the holidays, go ahead and start putting a small portion of your income to it.
Another great advice tip is to buy the actual gifts scattered throughout the year. Take advantage of sales at retail stores throughout the year and place that wrapped gift in a closet until the end of the year. This will help you from panicking on what to gift as the year comes to an end and will save you in the long run. Remember, in personal finance, it’s a marathon and not a race.
Cash is King
Nobody likes to give out cash but everyone likes to receive it. The first time my father took me to a casino, he handed me $100 for the weekend. He said, “This is yours. You can use it for the weekend to win more money.”
Knowing that casinos are rigged for the house to win, I instead played it safe that weekend. I didn’t spend any of the $100 and used it to pay off a bit of my apartment rent instead.
The lesson here is that everyone enjoys cash because they’re able to prioritize where their dollars are going.
Cash can seem cold and impersonal but it’s what the doctor ordered for your personal budget. This year, try to establish with your family members that you actually prefer cash rather than physical gifts. If they say no, that’s perfectly acceptable but it will stick with them to know that you prefer cash over objects. In this case, the gifts pay for themselves.
Have a great week :)
-Jordan