As the holidays approach, it’s important to budget in advance, plus take stock of your goals for the year to make sure you’re on track.
We spend months passing reminders in nearly every store, but the holidays still seem to creep up on us each year, and especially from a budget standpoint. Let’s make this the smoothest holiday season yet, and begin traditions that will make each year more relaxing and enjoyable than the last.
Take a Look Back
We’re heading into the fourth quarter (literally and figuratively) with 15 minutes on the clock. You’ve been planning, practicing, and executing all year. How have you played the first three quarters? Did you take that trip to Costa Rica? Go after that job change? Get your spending under control and start saving for that rental property?
What adjustments need to be made so you can win this year? Thankfully, there’s no opposing team, but you don’t want to look back wishing you’d done something differently.
It’s almost time to drop $100 on this year’s Halloween costume. Then pitch in for Thanksgiving, grab a few secret Santa gifts for holiday parties, and be sure to buy presents for everyone on your list. It’s not time yet, though. That’s why we’re beating the retailers to it and discussing the holidays so ridiculously far in advance. So you can create a plan and approach the holidays on your terms.
If you have important goals you want to reach this year, those should be your priority. It’s also a great time to revisit those goals, make adjustments where necessary, and set new ones. Don’t wait for the New Year, when you’re cringing at your credit card balance and wondering where your year-end bonus flew off to (unless it went with you to Costa Rica).
What are the goals you want to accomplish within the next year? They can be part of larger and longer-term goals, but also things you can definitively check off in the next 12 months, such as:
- Eliminating all credit card debt
- Saving up for a down payment
- Taking a big trip
- Starting a new business
Make sure to keep these goals where you see them every day. I have my list on my bathroom mirror, so I’m reminded and energized each day.
Keep Priorities Straight
From Halloween through the New Year, we’re barraged with opportunities to spend money, and we feel we should spend money. It’s not always easy to say no. What deserves our dollars, though? How can we resist 70 percent off at our favorite store?
First, ask yourself when you’re happiest. Think back to the holiday parties and expenses last year. Do you recall what you wore for Halloween? What presents you bought everyone and what they bought you? Are you filled with lifelong memories or recalling financial stress and wishing, in hindsight, at least some of that money was spent elsewhere?
The way we spend our money is a reflection of who we are. For me, my biggest category is travel and experiences. There was a time I thought I was being selfish and for a few years I put others ahead of myself. I’d buy generous gifts for family and friends while putting my own desires on hold. The gifts were appreciated, but nowhere near as much as I cherished my travel and experiences. I was trying to adopt a societal norm, but it didn’t benefit anyone, and it hurt me.
I no longer purchase gifts for any holiday, even for those closest to me. It’s not because I’m a Scrooge or I don’t value those people in my life. I decided instead, whenever I see something I think is appropriate, I’ll purchase and gift it then, irrespective of the date. For big holiday gift givers, though, you can still shop throughout the year and save your gifts until the stockings are hung. Just be sure to remember whom you’ve purchased for—and where you hid each present!
As you think about what’s most important to you, consider how you spend and save your money. Shopping is fun (at least, it can be) and it’s nice to see the look on someone’s face when they open a great present from you. So look at your priorities and your budget, come up with a set amount you’ll spend over the holidays, and begin saving toward that now. For example, if you’d like to spend $600, save $150 per month from September to December, rather than coming up with all $600 in December.
There’s a lot competing for our attention and money. Short-term goals, long-term goals, holidays, regular expenses, and those surprise expenses that manage to pop up at the most inopportune of times. It can feel like an ongoing challenge to get ahead, so let’s take control and get creative.
If your monthly expenses exceed your income, you have three choices: reduce your expenses, increase your income, or both. On the expense side, do a quick check to ensure your budget fits the following categories: 50 percent of your take-home pay to necessary expenses (rent, transportation, utilities, groceries), 20 percent to debts and savings (credit cards, car payments, student loans, emergency savings), and 30 percent for fun and discretionary spending. If necessary expenses or debts exceed these amounts, focus on reducing those until they’re within these parameters. That may mean aggressively paying down debts, moving to a less expensive place, or driving a vehicle that’s a few years old instead of the latest model.
Determine how much money will be coming in for the rest of the year, and start allocating percentages. For example, will you put 25 percent to pay down debts, 25 percent towards your upcoming goals, 25 percent on holiday spending, and 25 percent to splurge on yourself? This also holds true for any year-end bonuses you may receive. Remove the temptation and emotional aspect now by determining how best any additional monies will be spent. Do this on a percentage basis so the actual amount received doesn’t alter your decision.
Even if you’ll receive a year-end bonus, finding other ways to boost your income (like a side hustle) can propel you towards financial independence, and help you through the long, dark days that are just around the corner.
There are a number of nontraditional ways to make additional money. Consider renting out a room in your house for those traveling over the holidays. You’ll meet some interesting people and make a little extra cash. You can do the same thing with your car. Consider walking dogs for neighbors for the fresh air and exercise, and put that money straight towards one of those upcoming goals. If you’ve got a creative side or skill set that’s underutilized, hop on a site like Fiverr, Freelancer, or UpWork and get paid to keep yourself sharp. Or spend some time volunteering to meet and learn from new people while doing good deeds and giving back to your community.
We’ll be talking about New Year’s resolutions before you know it. If you’re honest with yourself now about what’s most important and what you want your life to look like, you’ll be celebrating all you’ve accomplished over the prior months: You took control of the holidays instead of letting them take control of you, and you’ll be at the beginning of your best year yet.
Kate Holmes, CERTIFIED FINANCIAL PLANNER™ (CFP®) professional, is the founder of Belmore Financial LLC, a location-independent financial planning practice she started on her quest towards living her happiest life. Kate works with professionals in their 20s to 40s who are ready to challenge the status quo and go after their happiest life.
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