Everyone wants to be Santa for the coming holidays, but this thought process can tempt you to make financial mistakes. After all, ‘tis definitely a time for giving’. Many individuals tend to get carried away with their holiday planning ideas, leading them to costly financial blunders.
Between countless social obligations and Christmas parties, it’s easy to fall prey to lucrative sales and gift-buying that wreak havoc on your finances.
To avoid falling into the same traps, read on to learn more about the common financial mistakes we tend to make during the holidays. It will be useful to you to find ways to avoid making these same financial mistakes and save your finances from going haywire.
Mistake #1: Shopping Without a Budget
One of the main reasons why many individuals find shopping a pain is because they end up shopping without a budget, thereby inevitably leading to overspending. While it’s thoughtful to buy your relatives and colleagues presents to show your appreciation, ensuring that these purchases fit in your budget is the most important thing. After all, there are still financial obligations you have to fulfill – from paying rent or mortgage to buying groceries, paying household bills, and even making insurance premiums.
To keep your finances from spiraling out of control, remember to stick to your budget. Gauge how much you are willing to spend, and while you’re at it, allocate the amount you intend to spend on each person on your list.
Mistake #2: Failing to Account for Other Holiday Expenses
Christmas gifts and goodies account for the majority of holiday expenses. As a result, most expenses related to the season tend to take a backseat until the very last minute. In creating your holiday budget, make sure to factor in other expenses, such as the dinner spread you are planning to prepare for the celebrations you’re having, as well as the airline tickets and accommodations you’ll be spending on if you’re traveling and visiting family.
Accounting for everything allows you to set a realistic budget for your spending, allowing you to eliminate surprise expenses that most certainly will put a dent in your wallet.
Mistake #3: Purchasing Expensive Gifts
Most individuals buy gifts that extend way over their financial limits. If this is the case, you’re most likely purchasing expensive presents to show you’re more financially capable. Partnered with the effective and largely convincing ads on social media, television, and the Internet, you might find yourself being easily won over into spending money you don’t even have.
If your budget is on the tight end, there’s no reason to feel guilty and overcompensate for that fact. Instead, stick to your budget and redefine the list of items you mean to purchase. In the end, it’s the thought that counts. Your family will understand if you can’t afford to buy them presents. What will be worse, however, is finding yourself in debt, which is not easily forgiven and can only be fixed with more money.
Mistake #4: Saving and Shopping Too Late
Most people make the mistake of saving up too late, which means these individuals tend to rely on their Christmas bonus rather than setting aside a portion of their savings to go towards this fund. Saving up too late entails pulling out a larger chunk of your savings, instead of dealing with manageable allocations on a monthly basis.
Don’t fall into these pitfalls. By simply sticking to your list and following your budget, you can get better control of your holiday finances. Take note that your financial trajectory dictates how you start the new year. If you don’t want to incur debt or drain your savings, avoid the financial mistakes above at all costs. Create a budget to help you save money for the holiday season, and things will ultimately work out.