A lot of people go through big holiday expenses before the year ends and it puts them in a difficult situation at the start of a new year. What is supposed to be a great way to cap of the year with people that matter to you can turn into a financial challenge. Trying to celebrate the holidays can be a test of your financial resolve.
The holidays can happen so fast that you can lose track of what you spend real quick. It can become a blur that the only memory you have of it is the credit card statement you get at the end of the month. Once you receive it, you start scratching your head trying to recall how you could have spent so much in such a short amount of time.
Big holiday expenses might not look like much while you are making them. That gift for your friends might look like a small amount until you total them all. Deciding to visit family and friends last minute seems like a good decision. That is until you book the flight and see how much last minute tickets during the holidays’ costs.
This is not to say that you should just stay at home and binge-watch the holidays away until it passes by. Globe-News Wire shares that in 2015, about 84% see the holidays being spent with family. It can save you money but you lose the chance to spend the holidays with people that matter to you. The idea is to find a healthy balance between enjoying the holidays and not putting unnecessary strain on your finances. Here are a few things you need to look into which usually leads to big expenses during the holidays.
Not having a holiday budget
Much like anything you do with your finances, you need to have a budget for the season. The lack of which is usually a big reason why you have big holiday expenses. Having a budget is a part of preparing for the expenses ahead. Just like your household budget which you use to manage your income and expenses. Without it, you could already be spending too much without even realizing it.
It is a good idea to have a holiday budget which is separate from your regular house budget. Set aside an amount you need for the holidays and work around that number. A good way to get started is to look up your expenses from last year around the same time. There is a good chance that you will be needing around the same amount.
Your budget needs to have a comprehensive list of people you want to give gifts to, events you will be attending or hosting, and travel plans you might have for the holidays. Add up the costs for all these and you get an estimate on how much you need for the holidays. As you have the list, make sure to stick to it as well. It will be of little use if you choose to ignore it.
Buying gifts too near the holidays
A big part of your big holiday expenses would revolve around gifts. Greensburg Daily News shares that about 33% of Americans spent about $1,000 on gifts last year. It has been a tradition for a lot of people to give gifts to people as a way of showing they are important to them. What people do is that the more important the people are to their lives, the costlier the gift becomes. This is why you tend to buy expensive gifts for family and close friends.
One way you can mitigate this cost is to buy gifts early and before the holiday rush. As the holidays near, demand becomes greater and what follows is that prices go up. If you are buying online, take advantage of free shipping if you bundle your purchases together. This can save you money rather than buying and having items delivered one at a time.
Another idea to help you save some money from spending too much on holiday gifts is to send personalized gifts to people. Take a look at your hobby and see how you can create personalized gifts to save money. Do you love painting? You can use that and give out paintings to people as a gift. You do need a lot of lead time to do that but it can save you a lot later on.
Choosing to use your cards due to lack of budget
There is nothing wrong with using your credit cards to pay for the expenses you will incur over the holidays. You can use it to pay for the gifts you will give out, pay for suppliers for a party you will have, or even for your travel expenses to see family and friends. In fact, it might even be a good idea as you start collecting points on your card.
This becomes a mistake that leads to big holiday expenses when you are using your credit card to make up for a lack of budget. If you do not have the money to spend you are better off buying less-expensive gifts or making the gift yourself. It can take a lot more time and effort in either looking for alternatives or creating presents but it can save you a lot of headaches at the end of the month.
if you keep on using your credit card to get through the holidays and you have no means of paying it back in full, you are creating your own problem. The number one rule of using credit cards is that you should not charge anything more than what you can pay off at the end of the month. If you do, you could be forced to pay only the minimum and interest, fees, and other penalties that can be added to your succeeding bill.
Forgetting to budget for your own gift
If there is one thing that people often forget, it is usually to set aside a budget for themselves. More often than not, you could be too preoccupied with what to give to family and friends that you forget what you can get yourself. When you leave that the last minute, you often splurge and overspend on getting what you want for the holidays.
If you overlook this item, it can contribute to big holiday expenses on your end. This is because you can end up buying something really expensive with an item over your budget. You might even book a last-minute holiday which is really expensive. One way to address this is to put your name in your list at the very beginning of your holiday plans. This way, you are reminded as the holidays draw near to set aside a gift for yourself.
Holidays are supposed to be fun
Holidays are supposed to be a great time but if you start using that to justify big spending then that quickly becomes an excuse to splurge. Know your priorities and be sure to stick to them so you can enjoy the holidays without getting into so much debt. If you get into financial problems at the end of the year, it spoils the holidays for you and puts you in a challenging start to a new year.
Big holiday expenses start to become a huge challenge when you overlook the need to prepare for them early on.