By Molly Alexi
Thursday, December 11, 2008 — It is December, and although we are “officially in a recession” you wouldn’t believe it if you have been by the shopping malls. Consumers everywhere are in full swing for holiday shopping.
It is important when planning the holiday season not to put too much pressure on ourselves. Everything doesn’t have to be and it won’t be perfect. Consumers may find themselves overspending because they want to give just the right gift instead of what they can afford to purchase. Smart consumers will develop a holiday budget that fits the family’s overall spending plan. They will also develop this budget before they begin shopping. It is vital to know how much money is available for gifts and other holiday expenses.
It is recommended consumers spend no more than 1 percent of their annual take home pay on holiday expenses. This means if you bring home $15,000 a year you should only be spending $150. If you are like me, this would not go far, especially with children. So, what we need to do is plan ahead and really be creative with our holiday planning. Don’t get caught handing over your credit cards simply because you want to buy the ‘perfect’ gift. Only buy it when it is within your budget. Setting a holiday budget is fairly easy.
Determine the total dollar amount available in your budget for holiday spending.
Prepare a list of gift recipients and set a budgeted amount for each person’s gift.
List miscellaneous expenses (decorations, cards, etc.) and set a budgeted amount.
List the estimated cost for each gift.
Consider another choice if the estimated cost is greater than the budgeted amount.
List the price paid against the budgeted amount.
Very Important. Total the price paid amounts. Very important.
Staying within the holiday budget can also help children develop a sense of good money management. It is important for children to learn the holidays are filled with wonderful memories — not expensive gifts that people cannot really afford to give.
Drawing names is one way to cut expenses, especially if you have a large family. To help cut down on the cost of the holiday meal, enlist family members to bring covered dishes. It also helps to establish a gift limit of $10 or $20, or whatever amount fits into the family’s budget.
To get a head start on next year’s holiday shopping budget, determine the amount that you spent on gifts this year. If your intention is to spend the same amount next year, then divide the amount by 12 and begin setting that amount aside every month. Collect loose change and add it to your holiday savings on a monthly basis. It may not add up to much extra cash, but it can help put a dent in the holiday budget next year.
For more information on creating a spending plan or managing your money, contact NC Cooperative Extension Agent, Molly Alexi at (704) 983-3987.
