Before you rush out and buy the Wii U or Xbox 720 the kids are begging for this holiday season, make sure it fits in your holiday budget. Don’t have holiday budget? Here are a few tips from BB&T Vice President and Market Leader Paul Merkle and A. Lawrie Gardner, a CPA and interim director of the business division at Anne Arundel Community College.
- Establish your holiday budget in advance — Identify your monthly expenses vs. your monthly income. The best time to do this is at the start of each year, Merkle says. This helps identify excess monthly cash flow that you can direct toward funding your holiday budget. “The most important part of being on a budget is knowing what your budget is!” he says.
- Fund your budget — Each pay period set aside a determined amount of savings for the holiday budget. Consider establishing a savings account specifically for your holiday funds, Merkle says.
- Stick to your budget — Before you start spending, but a plan in place to record expenses and revaluate your budget as you shop.
- Use cash — Fight the urge to use credit cards, Gardner says. Only use credit cards if you don’t want to carry cash or to accumulating rewards points but commit to paying the full balance at the end of the statement period, Merkle adds.
- Be realistic with the kids — Have them choose two or three items they really want and attempt to honor those wishes. Don’t make any promises you can’t keep, Gardner says.
- Don’t be impulsive — Make a list and stick to it.
- Layaway — A good idea, but not an excuse to go outside of the budget, Gardner warns. Get creative — If you are short on funds, consider the gift of time. Offer to clean out a friend’s garage or cook them a meal. Give homemade gifts. And where extended family is concerned, draw names out of a hat and give just one gift instead of giving to everyone, Gardner suggests.
Setting a budget creates and internal “self challenge” to do better by saving more and spending less, Merkle says.
“Whether we cancel the gym membership and go for walks instead; turn the TV off 10 minutes early each day or dial the thermostat down a couple of degrees, it is amazing how much you are motivated to save if you know what you are spending first,” he says.