… And Still Have Fun
Who hasn’t wished they could suddenly win the lottery and have so much money they could buy and do what they wanted without having to worry about sticking to a budget or getting into debt? Well … the Holidays are here and you probably have a list of gifts to buy, events to go to, some travel and some festive outfits to buy. Your expenses are increasing but your income isn’t. As tempting as it may be to ignore the reality and just plan to pay off the debts later, the smarter choice is to figure out how to manage your Holiday spending.
Blogger, author and single mom budgeting queen April McCaffrey joins me for this episode of Conversations About Divorce to give you some tried and test strategies for getting a handle on your Holiday spending and still having fun.
Here’s what April and I chat about:
It’s Not Too Late To Budget
Even if you don’t follow a budget regularly, do create a budget specifically for your Holiday spending and the sooner you do this the better. Budgeting is a process. It doesn’t happen overnight. The hardest step is often simply getting started. So if budgeting for all your household expenses seems overwhelming, tackling the Holiday spending could be a good way to break this into a more manageable piece.
McCaffrey says the mistake that people often make is to decide everything they want to buy as step one. It’s better to start by seeing what money you have available for Holiday spending and then make your spending decisions.
Cash In Loyalty Programs
This is akin to finding money. If you use any loyalty programs such as Swagbucks or Ebates that award points throughout the year now’s the time to check those point balances and cash them in. Check your frequent flyer miles to see if you have enough accumulated to cover a flight back home or the hotel stay for while you’re visiting family. And remember to check point balances on your credit cards.
Find Your Hidden Expenses
Gifts for your loved ones are obvious expenses but there are lots of other outlays that are easy to overlook, These can easily add up and blow a hole in your budget. When you’re working on your budget try looking at your calendar to see the events you’ve committed to and then list the expenses associated such as meal cost, bottle of wine and Secret Santa gift. Another suggestion is to go through your credit card and bank statements from last year. If you don’t have paper copies you should be able to access these online.
Be Realistic About Activities
Wanting to save money doesn’t mean shutting yourself away at home. Check your local newspaper for free events and activities and then when you go to these, be selective about what you buy. For example, you might go to see Santa at the mall but choose not to pay for a photograph.
Gift exchanges are always well-intentioned but they can stress the budget and get out of hand. At work you might suggest doing a Secret Santa as an alternative and setting a reasonable dollar limit for gifts. I used to work with a couple of ladies who came from large families and had 9 – 12 siblings. They would put everyone’s names into a hat and then each person would draw one name and buy for that person. Some families agree to limit gifts to the children only.
Get Comfortable Talking About Your Budget
The hardest part about making suggestions like a Secret Santa or limiting gifts is having the courage to admit to others that your budget IS limited. Few of us have been raised to talk openly about money and that makes these conversations uncomfortable. We’re afraid that others will judge us or somehow think less of us because we don’t want to or aren’t able to spend so much. In practice though if you start this conversation you will find allies and they will thank you for taking the lead on this. And once you’ve had this conversation, you’ll be more comfortable having it again.
Here’s another tip. Rather than saying, “I can’t afford this,” try saying, “This isn’t in my budget.” The difference here is that with your budget you are choosing how you spend your money. You’re choosing what is important to you and what you can live without. Having that choice is empowering. You have control. The “I can’t afford it” statement is reactionary, like you have no influence over it. It’s a difference in philosophy and that will change how you feel about budgeting.
The reality is that whether we budget consciously or not, few of us have the resources to support carefree spending.
Rethink Teacher Gifts
Yes, I did say to rethink teacher gifts. Buying a single gift for your child’s teacher in elementary school is one thing. Buying a gift for each of six or seven teachers in middle or high school becomes a significant outlay. Alternatives might be a creative homemade card from your child or maybe a classroom donation such as tissues or hand sanitizer. Classroom donations may not be fun or festive but many teachers these days are paying for these supplies out of their pockets so these are gifts that will be greatly appreciated. The plus for you is that you may be able to get these with your regular grocery budget.
Do Not Go Into Debt
It is hard to resist all the tempting ads and seemingly awesome pricing but the bigger picture is that there probably isn’t any Holiday spending more important than your financial stability. And as much as you want to see your kid’s eyes open wide in wonderment and to hear them squeal with delight, you being able to put food on the table and not having to avoid calls from debt collectors far outweighs your child’s momentary pleasure.
It goes back to making conscious choices about what you want to spend your money on.
That being said, if you decide that going into debt is what you need to do to manage your Holiday spending maybe because you’ve had other unplanned expenses, then make sure you understand the terms of the loan and already have a realistic and achievable plan for paying it off.
McCaffrey suggests looking to cut back temporarily on other expenses such as your cable subscription, and to look for ways to supplement your income to help cover your Holiday spending to manage short-term debt.
Record Your Expenses
Like so much else in life, awareness is the first step to changing and managing behavior. When it comes to managing your Holiday spending that means keeping track of everything you’re buying. This could be as simple as writing it down in a notebook at the end of each day or if you want to be more sophisticated, using some budget tracking software like YNAB (You Need A Budget). Keeping a record like this will ensure no surprises when you do get your credit card and bank statements.
Involve Your Kids
Our kids are exposed to just as much as advertising as we are and it’s only natural for them to want some of the cool toys and latest gadgets for gifts. That doesn’t mean you have to buy everything they want. This can be about having an age-appropriate conversation with your child, setting their expectations, teaching them about how to prioritize their wants and recognizing that if they get the iPad mini, they likely won’t have the new video game platform as well. And you can do this without telling them exactly what you are able to spend or the specific gifts you’re going to get.
The value of having conversations like this is not just about understanding the constraints for this year. This is part of an on-going dialogue through which you are teaching your child about managing money. You are setting the stage for them to have a healthy relationship with money and to be comfortable talking about it.
Team Up With Your Ex
For big ticket items that are out of range for you, you might consider teaming up with your ex and giving a gift jointly. You can figure out how to share the expense – it doesn’t have to be 50/50 and your child doesn’t need to know the split.
If you know your ex is struggling financially giving a joint gift could be a compassionate way of including and supporting your ex.
Sadly, too often bestowing gifts on children is used as form of manipulation and control against either the other parent or the child. If you’re the victim in this scenario, then the best strategy is to set your boundaries to protect yourself and to help your child to do likewise.
Learn more about managing your money from April’s blog It’s All About Balance and from her ebook Balancing The Single Mom Budget available on Amazon.com.