‘Tis the season to get a jumpstart on those holiday plans — and budget.
The average American family estimates they spend roughly $900 each year on just the gift-buying portion of the holidays, according to a 2015 survey conducted by the American Research Group. Add in the cost of meals, travel plans, or festive gatherings and the dollars stack up quickly. For many military families operating with already-tight finances, overspending or any unexpected spending can cripple a budget while sending you into a financial nightmare. Planning is the key to setting yourself up for success and avoiding economic hardship, Jennifer Hemphill, an Accredited Financial Counselor, says.
Hemphill, who has been an Air Force wife for 16 years, pursued a career in financial counseling to build a portable career that could move with her. She works with clients to craft reasonable financial plans. She said there are common mistakes she has seen people make when it comes to holiday preparation. The first being no preparation at all. “(People) don’t necessarily plan, they don’t think far out in advance. They just shop,” Hemphill said. “So there’s really no plan in place. There’s not necessarily any savings. And people do it every single year so they end up putting expenses on a credit card or something like that.”
Though, she emphasizes that just formulating a plan isn’t enough.
Once it is determined how much you expect to spend, attach actionable items to pulling that money together.
“One thing I always teach is for anything that doesn’t come on a regular basis — gifts, holidays, … do a budget. Plan it out. But just creating a budget isn’t enough. A number sitting on a spreadsheet with no action attached to it isn’t going to do you any good. Come up with the number you think you are going to spend, then come up with the monthly number you need to save based on how much time you have until the holidays,” she said. “Let’s say you plan to spend $1,200. Divide that by 12 months and do an automatic transfer to put that money aside immediately.”
Review last year’s spending
Before getting to work on any new budget, Hemphill says an analysis of the previous year’s spending can serve as a good metric for what worked and did not work. Once you determine where you succeeded, or failed, make adjustments. “Look at what you spent in the past,” she said. “Were we happy? Do we think we overspent? Did we overdo it? Did that feel good to us?”
In some cases, companies may be willing to work with you on lowering interest rates or delaying payments.
Designate holiday budget money
Some people are proficient at savings and sticking to a strict spending schedule. If you are disciplined enough to put money to the side and not touch it, Hemphill says to either designate an account solely for the purpose of holidays or take the cash out and hold it in an envelope.
Army wife Ann Marie Detavernier, a mom of three, says what has worked for her family is to allot funds for those unique costs that come up every year.
“Our monthly budget includes between four to five hundred dollars for savings. This method of saving allows us to afford surprise car repairs, summer travel, fall birthdays, a big Thanksgiving (with invited single soldiers) and a modest Christmas,” said Detavernier, an Army wife. “This sounds pretty lavish, but birthdays here are a homemade cake by mom, dinner at your favorite restaurant and one big gift no more than one hundred dollars. Christmas, too, is usually one big gift and stockings full of fun holiday snacky stuff.”
If building a savings seems unlikely for your household, explore layaway options as a means to allow you to pay for gifts a little at a time, depending on how far out you set it up. Stores often offer this option with nominal or no added costs, plus it gives you the opportunity to see upfront how much you are spending.
Find places to cut costs in your holiday budget
If between now and December you don’t have the means to make extra income, there are ways to eliminate spending. One suggestion is to have a conversation with extended family and friends about not exchanging gifts, says Jennifer Morrison, an Active Army Reserve wife.
“I start buying in September. We try to keep a fairly small limit on gifts and limit giving to immediate family. Our siblings have agreed giving isn’t necessary now that we have kids and we do Pollyanna with them,” Morrison said. “Pollyanna is where we put everyone’s name in a hat and each person draws a name and that’s who they give a gift to. Now that my kids are getting older they help pick out the gifts which adds a more personal touch to it.”
She says that knowing how to approach that kind of talk can be difficult and requires tact.
“It’s hard to have the talk about gift giving because it means different things to different people. I think
the best way to do it is know your audience. With my mom, she was spending hundreds of dollars on each grandkid but they don’t need anything. My sister and I finally said to her we appreciated her generosity, but it would be better spent making memories than buying that plastic toys they’ll grow out of,” she said. “With my sister and (my husband’s) siblings, we all just looked at each other a few years ago and said ‘We have kids now, we’re done buying for each other right?’ We’re blunt but when it becomes a struggle financially or logistically to give a gift it sucks all the fun out of the holiday. We’re happy just to spend time together, something very hard to come by.”
Another option for shedding costs is to ask if a store offers a military discount, keep a lookout for upcoming sales to get the best possible price on an item, and look for opportunities to buy from local shops who may offer deals.
Negotiate your bills
Once you have figured out what you want to spend and looked at what you have to spend, you may still fall short. Hemphill explains that in some cases companies may be willing to work with you on lowering interest rates or delaying payments around the holiday season.
However, be very clear on what the stipulations will be.
- Always call versus submitting the inquiry online. Hemphill says there is a lot of power in talking to a
person. - Explain your history with the company. For example, you have always paid the minimum payment on time.
- Explain your circumstances.
- When they come back with an offer, always ask if that is the best they can do.
- Get a clear understanding of what, if any, stipulations are attached to the offer.
- Show gratitude.
There’s an app for that
A final tool at your disposal for stretching the dollar this season is to utilize technology. There are applications that allow consumers to earn money back on products.
Examples of those are:
- Ibotta – gives you cash back on products by submitting receipts or linking to store loyalty programs.
- eBates – helps you find coupons and deals at stores; earn cash rewards
In an ordeal world, the earlier you can save funds for the holidays the better. However, that isn’t always a realistic option for everyone. If you are one of many families living paycheck-to-paycheck, or worse, allotting money twelve months out for events in December isn’t doable. But that doesn’t mean you can’t end up with the type of celebration you are aiming for either. As long as you build a plan now based on an accurate analysis of your financial situation and determine reasonable ways you can allocate money towards those expenses, you can still create the memorable holiday you want without carrying lingering debt into the New Year.
For more information about Accredited Financial Counselor Jennifer Hemphill, visit her website.
