Last night (as I sat in a turkey-induced coma) I watched in amusement as family members were gearing up for their annual Black Friday outing. Newspaper ads were strewn across the dinner table while they chatted about the most strategic routes to the best deals and how much they budgeted to spend at each location.
Their whole process reminded me of an article I read a few years ago that recommended a family spend 1.5% of their gross annual income during the holiday season for gifts.
That number kept running through my mind as they said their goodbyes and headed out to spend their hard earned money.
What Should You Be Spending?
It is easy to get “wrapped up” in all the hype about what you should be buying, or how much you should be spending.
Our society is obsessed with putting a number to happiness. If you don’t achieve that number, you feel like a complete failure; no wonder why so many of us have the winter time blues.
It is unrealistic to generalize everyone’s situation, and, to suggest that spending 1.5% of your annual income is the “norm”.
For instance, a family might have an annual household income of $250,000, but have horrible cash management skills and are drowning in debt.
Is it fair to say they should spend $3,750 this holiday season because that is what is expected? I don’t think it is.
I believe there are ways for families to still have fulfilling holidays while keeping on a budget, but not falling to social pressures.
Keep On A Budget
The keyword in knowing what the right amount for you to spend is budget. If you don’t know how you are spending your money, you won’t be able to identify problem areas that are holding you back from achieving your goals.
Simple cash management today can go a long way in future financial success.
It usually takes six months to a year of continually tracking cash flow in order to get a good idea of where your money is going. Once you have established a budget that allows you to fulfill your most basic needs and goals, you can start to branch off and save for the things you enjoy; vacation, hobbies, holiday spending, etc.
Many financial institutions offer savings accounts that are aimed at specific goals. These are great ways to keep yourself on track for holiday budgeting. As a bonus, they usually have certain periods that you can withdrawal money, which will keep you from being tempted to dip into it.
Other Holiday Spending Ideas
If you don’t have a budget set up yet, or you are struggling to stay on budget, here are some recommendations that can help you keep your holiday costs low, but still enjoyable:
- Invite friends and family over for dinner. You can usually provide a meal for 6 people for under $75. You are still providing your loved ones with something special, but keeping your costs to a minimum.
- Take the family on a light tour around your town. Looking at the holiday lights that people hang each year is free! You get to spend quality time with your family and create lasting memories. Make the trip even more special by making some tins of hot chocolate.
- Host a white elephant gift party. Everyone bring a gift under $10 and exchanges it with someone else. There are fun rules you can find online to make the exchange even more fun. You may even suggest a pitch-in so everyone gets fed, but the cost is split between multiple people.
- Consider making charitable gifts in honor of someone. The money is going to a good cause.
These are just a few budget-friendly ways you can take part in the holiday spirit.
What it really boils down to is that creating memories and sharing time with loved ones is more important than any material gift.
Don’t get sucked up into what other people are doing and focus on what makes you happy.