The holidays: it’s a rough time of year if you operate on a small budget. All those gifts to buy, people to entertain, and food to make can add up and put pressure on your finances. As a result, the average shopper in the US adds more than $1,000 in credit card debt during the season, and nearly 40 percent of them take longer than five months to pay it all off.
If you only just settled your debts from last December, you probably aren’t keen to start the cycle all over again. Luckily, you don’t have to. There’s still time to prepare your finances for the most expensive time of the year, and this guide will help you do it.
Know the facts — what do Americans spend?
It’s easy keeping things vague by saying the holidays are expensive, but ambiguity has no place in your finances. They benefit from accurate numbers and calculated predictions, so it’s time to leave behind guess work and rounding.
If you truly want to limit the holiday’s impact on your finances, you need to face the reality of the season’s costs. Last year, U.S. shoppers were expected to spend as much as $1.5 trillion between November and January. According to the NRF (National Retail Federation), they’re on course to spending 4.4 percent more this year. If the NRF’s 2018 Forecast ends up being correct, that means the average consumer will spend more than $1,000 on gifts, decorations, and food.
Know the facts — what do you spend?
If the average American spends a grand on the festivities, you have to figure out how you measure up. This is easy to figure out when you create a budget that tracks the purchases you made over the past 12 months. This look back on the year gives you a good understanding of how you typically spend your money during the average week.
More importantly, when you focus on your previous holiday habits specifically, you can see what you spend on the celebrations.
When tallying your expenses, you should include everything — from debit charges, purchases made with gift cards or loyalty points, credit cards, and any personal loans you took out. Not only will this give you an accurate perspective on your holiday spending habits, it can show you what item (or cluster of purchases) pushed you over your budget’s limits and into the red.
Start saving by making sacrifices early on
Saving on a small budget isn’t easy, but it’s possible when you have patience and dedication. Your budget is a great tool for showing you potential savings in bad spending habits. If you can eliminate unnecessary spending on things like takeout, extra clothes, or gadgets, you can reroute this cash towards your savings.
The earlier you start saving, the more you’ll be able to put away for your holiday fund. Not only because you have more chances to contribute towards these savings but because you’ll also start earning interest on what you’ve managed to put away.
Interest earned on a basic savings account is typically small, but every little bit helps. Once you start saving for real, consider switching to a high-interest savings account. While they usually require a minimum balance, they come with extra earning potential.
Have a back up plan prepared
There’s no use for a savings plan that’s so rigid it cracks under pressure. Your finances need to be able to adapt to anything that comes their way — expected or not — but unexpected bills or repairs are hard to anticipate. You aren’t always prepared to find out your kitchen pipes have frozen or that your nephew broke your TV or that your cat swallowed some Christmas ribbon.
If these unwanted responsibilities come at a time when your savings are still in their infancy, you can find a payday loan online to help you cover these bills. Online payday loans are an easy and quick way to secure essential financial assistance that fit the hustle and bustle of the season.
While traditional banks can take time reviewing your application, online lenders have streamlined the borrowing experience to provide fast-acting short term loans. In some cases, lenders like MoneyKey can facilitate loans within one business day. To see how else they differ from conventional cash loans, stop by MoneyKey to learn more about the online borrowing process.
Shopping for the holidays without going over your budget is a challenge. Debt looms ominously like the sprig of mistletoe hanging in the office, but just as you would remember to avoid this decoration, you can navigate your finances away from the red this season. Both just take a little planning and self-awareness.