Holiday budget - Question/Answer feature

R. Joseph Ritter Jr.



By R. Joseph Ritter Jr.

We always seem to overspend at the holidays, and then we have trouble making our bills in January and February. Do you have any tips to help us? Fern B. in Stanford, Kentucky.

Dear Fern, Holiday spending can quickly get out of control. As fun as the holidays are, who likes getting a big credit card bill in the mail the day after New Years? Here are some practical tips to keep holiday spending under control and have fun without breaking the bank.

Create a holiday budget. It's too easy to justify small purchases because they won't really have an impact on your wallet. Wrong! Those $5 purchases every other day add up fast. Take control by making a separate budget just for the holidays.

Put your holiday budget money in a cash envelope or separate bank account. This way, you can spend guilt free and will not overspend from money you need for priorities. You also will avoid charging purchases to your credit card, so there will be no big bill to pay in January.

When your holiday budget is spent or your money stash is gone, stop spending! It sounds simple, but it can actually be hard.

Make it an important priority that you stop spending when the money is gone. Avoid impulse buys. Make a list of the gifts you want to purchase with your holiday stash and stick to it. Careful planning will be necessary, but it will pay off in the long run.

Start thinking about next year. Yes, you should be thinking about the holidays beginning in January! Write out a budget for next year, and then divide the budget by 12. Each month, deposit 1/12th of your holiday budget into a separate bank account or in a cash envelope. When next year's holidays roll around, guess what? You've got a stash of money to spend guilt free!

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R. Joseph Ritter, Jr. CFP® is President of Zacchaeus Financial Counseling, Inc., a 501(c)(3) non-profit organization serving low-income households with financial planning and financial coaching services. Zacchaeus Financial Counseling, Inc. provides services to individuals and conducts free financial clinics and educational seminars.

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