The holiday season is a beautiful time to share with family and friends. Avoid unwanted stress by creating your holiday budget and sticking to it. Yes, you want everyone to be happy; however, spending all of your free time working extra hours to pay for gifts doesn’t sound very enjoyable. And you don’t want to spend the first few months of the New Year clawing your way out from under a heap of credit card payments and other bills.
A simple way to keep the holidays festive and stress-free is to create a budget specifically for holiday spending. Here’s how to organize your finances for success:
- Step 1:: Determine an Amount
Begin your holiday budget by determining how much you can realistically afford to spend. Review your current finances and establish a set amount.
If you’re limited on money available for the holidays, look for areas within your everyday spending where you could temporarily cut back to free up extra cash. Once you have a dollar amount to work with, begin breaking down your budget into categories.
- Step 2:: Categorize Your Expenses
Organizing your expenses into categories provides a simple and effective way to prevent overspending. Start by creating groups, such as:
- Gifts for Others
- Parties & Events
- Travel Expenses
- Decorations
- Charity Donations
Under each category list, all the expenses you think you will incur during the holidays. For example, under “Gifts for Others,” write out everyone you plan to buy a present for and how much you will spend. If all the expenses within your categories exceed your holiday budget amount, you will need to limit your planned spending.
- Step 3:: Set Limits
It’s easy to get carried away during the holidays. Whether it’s the expensive tech-toys at the top of holiday lists (such as smartphones, tablets, and gaming systems) or extravagant travel plans, going into long-term debt for the holidays is never a smart idea.
Review your expenses listed in Step 2, set limits for each category, and stick to it. Your finances will thank you in the New Year.
- Step 4: Budget for Surprises
It never fails. You think you’ve covered all the bases when it comes to holiday expenses, and then you realize you forgot someone. Or maybe you’re invited to a party you hadn’t planned on. Either way, it’s essential to set aside some emergency money for any surprise expenses that may come up.
- Step 5: Borrow Smart
Even with all this planning, you may find yourself tempted to find other ways to help pay for the holidays, including high-interest credit cards or payday loans. However, these options will only lead to more financial problems down the road.
If you need to borrow money during the holidays, consider a Holiday Loan or Personal Loan instead. You will experience three main benefits when using a Personal Loan versus a credit card for your holiday expenses.
- You will receive a specific amount of money with your loan. This helps prevent overspending and makes budgeting easier.
- Your loan will have a set repayment period. Unlike credit cards that only require a minimum payment each month, a Personal / Holiday Loan will help you pay off the balance quicker and avoid long-term debt.
- The interest rates are lower compared to high-interest bank and store credit cards. And they’re lower than payday loans!
If you choose to borrow money during the holidays, be responsible and consider paying back the amount as quickly as possible.
We’re Here to Help!
If you are interested in learning more about our Holiday Loan, give us a call at (800)977-7919 Option 1, email us at applyloan@magfedcu.org, or visit us online at www.magfedcu.org.