Paying for Christmas in Advance

One of the biggest mistakes that I see people make with their money happens every December. I have to confess I have been one of those people in the past. Does this sound like you? Do you start preparing Christmas lists in December? Are you rushing around buying gifts without much of a budget in mind? Are you taking the time to closely watch your spending during a time when it is easy to overspend? Do you buy presents on credit, rationalizing you will pay for it later? Do you go into shock in January when you get that card statement?

If you answered yes to those questions, we need to talk.

Out of all of the months in the year, December has to be the toughest on the checking account. There are the gifts that you buy for loved ones. There are the unexpected gifts that you have to buy. There are gifts that you have to buy for people in the office or for friends. Then there is the money that is spent on Christmas parties. It all adds up in a big way.

I have found that most are very unprepared for Christmas. As a result, the credit card becomes the convenient solution to lack of preparation. If there is one month that needs some advanced planning, it is December.

So here are some tips to planning for Christmas:

1) Determine how many presents that you have to buy – family, extended family, friends, co-workers, kids’ teachers, etc.
2) Determine how much you are going to spend on each person.
3) Determine any extra expenses that you might incur – Christmas cards, postage, etc.
4) Realistically look at how you are going to pay for it and start saving.
5) Stay disciplined.

If you are not prepared, you create debt. It is that simple. Think about it for a moment. It is Christmas time. There is a lot emotion. We want to buy our loved ones gifts (especially kids). I also think we know deep down inside that we are going to spend more than we have – I call it fantasy budgeting. It is easy to just ignore the problem and use plastic.

This year do things differently. A little planning today and a lot of discipline over the next few months will go a long way.