Steve and Sue sat at their kitchen table looking dejected as they discussed the up-coming holiday season. “How are we going to afford all this on a tight budget?”
The truth is that Steve and Sue are not alone. With the coming of Fall, our attention turns to the upcoming holidays, especially paying for them. And what do we feel?
But the truth is, it doesn’t have to be that way. There are several things people can do to prepare for the November/December holiday rush of spending.
Most people wince at this idea. Who wants to be “the cheap one?” However, we must be mindful, not just of the financial cost of lavish celebrations and expensive (or multiple) gifts. Rather, we must also be mindful of the opportunity costs that come with such spending. So, for holiday celebrations, why not go with a pot-luck approach? This can become a way that you can share favorite recipes and conversation about the food in addition to cost and labor.
In my family we “pull names” so that each nephew or niece receives a gift, and the parents (aunts/uncles) don’t go broke buying a gift for each kid. It also allows for one nicer gift for that one child. Of course, if your budget can support gift giving, that should be ok too. Why not offer a gift of time with your nieces, nephews, grand children? It will create memories and will give their parents some free time together too. I’ll have more to offer on gifting in another post.
Pick Up a Seasonal Side Hustle
If your budget needs a short-term boost, why not look into picking up a part-time seasonal job? Many businesses hire people to work during the busy shopping season. There are plenty of opportunities for a person to pick up hours and extra money to give their budget that small boost to help out during the season. Start now and maybe even start a sinking fund – it’s not too late.
Set Up a “Sinking Fund”
When I was a kid, my parents would take us to the bank in January, and we would set up a “Christmas Club” account. The whole point of the Christmas Club was to save a little bit of money each month for 12 months. I remember my first one… I put $20 away for 11 months. As a 10 year old in 1975, I had $220 to spend for Christmas. I felt rich! Another term for this is a sinking fund. Why? Because we treat it like a debt that we’re paying off. We save a certain amount each month to pay off the holiday bill without incurring debt – so there are no interest payments. What if we knew what we wanted to spend for Christmas (or whatever holiday we’re talking about)… What if we divided that number by 11 or 12 and then stuck that amount in an envelope each month? How much easier would that make our holiday season? Just think, if you set aside $100 per month, you’d have $1200, and $200/month would bring you $2400! Wouldn’t it be nice to know that you had it covered and wouldn’t be paying a lender back for that – because you’re not paying interest to a credit card company (because you paid cash), you can actually afford more – or better!
Create A Hill and Valley Account
For some the stress comes because their pay fluctuates, and they may not be sure how much money they will have available come the holiday season. So, perhaps the sinking fund may not be the best vehicle (although it would help). For example, I teach for a college part-time. I know that in January and August I will not receive a paycheck from them. So, I take a portion of each pay I receive from them and set it aside. I cut off the top of the mountain so that I can fill in the financial valley that hits my February and September budgets. It evens out my cash flow. So, if things slow down for you in the fall, consider setting some of your income aside to help fill in later gaps.
Side Note: Events, parties, gifts, guests, and holidays are not emergencies. Shopping for these should never come out of your emergency fund. That money is strictly for things that unexpectedly break, for illness or injuries that need to be covered.
Your fall occasions and upcoming holidays will be much brighter when you are not stressed about how you will pay for them. It only takes a little planning and short-term sacrifice to enjoy them. Let’s trade the negative emotions that often come with the thoughts of holiday spending for joy, freedom, and peace that these costs are already covered!
If you have any questions, or need help making sense of your budget situation. I’m here to help! Give me a call today!