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Six steps to making and keeping a holiday budget

—Christine Hoaglund

With the holiday season quickly approaching, now is a good time to make a plan for budgeting your holiday spending. Creating a workable budget—and sticking to it—can help you avoid an unwelcome surprise when you open your bank or credit card statements in January. By following a few easy steps, you can be on your way to a successful, debt-free holiday.

1. Take a look at last year’s holiday expenses. Determine how much you spent on gifts, party supplies, clothing, decorations, travel costs, and any other holiday-related bills. Were you comfortable with that level of spending? If you found yourself scraping by in January to cover your holiday costs, make a plan to reduce holiday spending this year.

2. Set out a dollar amount for each holiday spending category. Using last year’s figures, you can create reasonable spending guides for each category. If you can do without a new outfit for the office Christmas party, you may be able spend more on gifts or put the money in savings. If your holiday party is known as the best in the neighborhood, consider a larger decoration and food budget, but plan for less gift-giving money.

3. Let your family know the budget. Budgets are excellent tools for keeping your spending in line, but without the help of your family, sticking to one can be tough. If your kids are expecting to give gifts to a half-dozen friends, let them know a manageable budget for each gift. If your family is planning a holiday vacation, provide a realistic picture of where and how you can travel.

4. Make a list of gift recipients, and check it at least twice. Because gift-giving is different for everyone, there is no rule for adding or removing recipients from your list. If you’re uncomfortable taking anyone off your gift list, consider lower-cost items. A handmade gift can have more meaning than a piece of jewelry or an electronic gadget. Another saving option is a gift drawing for less immediate family, friends, and coworkers. Also, personalized cards are an excellent way to send holiday greetings to your far-flung friends and family—and much cheaper to mail than bulky gift boxes.

5. Avoid holiday impulse purchases. During the holiday season, it is easy to get swept up in the many sales and events that encourage you to buy, buy, buy. But think about whether you will appreciate those purchases after the holidays are over. Determining which items will and won’t have an impact on your year-round happiness can help steer you away from overspending on impulse buys.

6. Keep tabs on your spending by recording everything. Make a list of holiday categories and record all your purchases the same day, either in a simple electronic spreadsheet or with a pencil and paper. Otherwise, that receipt—and your memory of the purchase—may disappear. Keeping an accurate record of all your holiday spending can keep you on budget and prevent overspending. And it will provide you with the documents you need to work out next year’s holiday spending plan.

Christine Hoaglund is a financial advisor at First Command Financial Services in Albuquerque and lives in Placitas.





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