Are You Avoiding Financial Stress During the Most Wonderful Time of the Year?

It's that time of year again: there's a chill in the air, Christmas music is on the radio, the holiday edition Starbucks cups are finally out. Most of all though we're doing a lot of holiday shopping or at least that's how it can feel sometimes, right? A lot of the joy we're supposed to experience during the holiday season can easily be negated when we get caught up in the financial pressure that, unfortunately, can come all too naturally shopping for gifts. Your family, children, friends, coworkers, mailman, the list of who you just need to get a present for every year seems to get longer and longer. Thanksgiving comes and goes and before you know it, you're spending more than you thought you would this year again. It doesn't have to be like this. There are some last-minute and long-term steps you can take in order to budget for the holiday season, decrease your anxiety for the future, use your dollars in the most effective manner possible, and enjoy your holiday even more. 

1. Automatic Savings 

Remember how your retirement savings gets automatically deducted from your paycheck? (if it doesn't, this is now your 2018 New Year's Resolution). You can use the same tactic for holiday spending. There are a few ways to go about it: Start by estimating how much you will need in total to spend on holiday expenses, breaking it down into monthly expenditures. Set up a separate savings account and automatically transfer from your checking account once a month. Or, most employers will allow you to split your paychecks into more than one account. You could use this to your advantage of a portion of your paycheck going into your holiday savings account. 

2. Cash-In on Rewards

While we would advise against using a credit card for all of your holiday spendings, now is the perfect time of year to cash in on any rewards programs that come along with your credit cards. Research what sort of travel rewards or special offers your credit card company can offer you now to cut back on costs. You may be able to redeem points for gift cards or use points to book a flight, book a hotel room, or rent a car. While you should always be careful using credit cards, check out this guide to find a card that will offer you benefits that align with your needs and help you out next year. 

3. The "Envelope Trick" 

This low-tech, old-school strategy can really do the trick, especially if you're short on time. Make a list of every person you need to get gifts for and determine the amount of money you wish to spend on each individual. Assign an envelope for each person. Proceed to the ATM. Dispense the amount of cash you'll need and divvy it up among your envelopes. You could do this for other items as well such as what you'll allow yourself to spend on holiday decorations or that new party dress for New Year's Eve. This is a non-negotiable amount of money you have to spend. By limiting yourself to using cash, you take away the desire to overspend using credit cards. To help yourself even more and reduce temptation, you may want to leave your credit cards at home when you go shopping and only bring these designated envelopes. Remember, adding to your debt due to holiday spending isn't only going to create more anxiety for yourself into the New Year. 

As much as this time of year can be special, it can also be a lot to handle. When you're planning out your holiday spending, try to focus on remembering what you have valued most in years past. Was it a gift or an experience? Did it cost a lot or was it inexpensive? Spending extra money at this time of year is inevitable, but it is possible to reduce your annual headache by simplifying the process and determining where your funds are best allocated.