'Tis the season to hand over your wallet
As Christmas approaches fast, we are spending more and more on outings, gifts and party supplies. But sometimes that's the sacrifice we have to make to celebrate this annual tradition. This year I have two rules to share to keep you from being broke this holiday season.
Here's two very simple concepts you need to keep in mind when shopping for the holidays:
1. Don't spend more money than you have
2. If the money isn't in your bank account then IT'S NOT YOURS!
The second concept is where people tend to make their mistakes, many assume they will receive a big fat pay cheque for all the hard work they've put in over the past few weeks, and they assume the bonus will be enormous, but only to find an unpleasant surprise. For example, you assume you'll have $3000 by the time pay day comes so you decide to buy a fancy new Apple Macbook Pro for $3000 and swipe it away with your shiny credit card. However, when pay day comes along, you check your bank account only to see $2000 instead of the $3000 you've anticipated for. So now what do you do? You're short $1000, how are you going to pay back the credit you just spent? Do you ask mom and dad for cash, or dig into your savings, should you forget about the bill and pretend it never happened?
The sensible answer would be to return the product because you can't afford it. But sadly, many don't. Many people continue to swipe away money they don't have and dig into their savings to get what they couldn't afford. Over time they create a mountain of consumer debt that puts them into the biggest financial hole of their lives. So in order to avoid this catastrophe this holiday you will use no cash advance, and no credit cards. We're going to use cash.
Here's what you'll have to do
Golden rule of budgeting is to write down everything you spend, it's as easy as it sounds. I will provide you with a structure on how to get things done. For the next steps I'll be using Gail's budget plan to explain this budgeting strategy, please see: Gail's Holiday Spending Plan. Or, if you're good with excel you can go ahead and create your own spreadsheets.
1. First, take a look at your bank account, how much do you have? How much money can you spend without jeopardizing the other essential areas of your life, for example food, transportation, rent/housing, bills, etc. If you have little money, you might have to find cheaper alternatives, free events or stay indoors. On this budget plan, fill in the top the amount of money you have to spend and who will you be spending it on. Here's my example:
2. Second, input the amount you plan to spend in each category including the after tax cost:
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| As I continued to work on my budget I realized I could combine categories together to save both money and time |
3. Now scroll down to the bottom to see if you are under or over budget. If you are over budget you will have a negative sign (ex. -12.34). If this happens you will need to readjust your budget to see where you can cut cost.
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| Here you see I am $27.51 under budget. On the left, there are other categories you can use to help fill in your planned spendings. I won't be needing them so I'll leave those categories blank. |
4. If all is good, then you can print this out and keep track of it while you're shopping. Once you've done some shopping, scroll back up to the top and start filling out what you've actually spent.
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| In each gift, I've found ways to save money. Either through friend's connections, coupon deals, going to a more affordable restaurant, or not going to a party altogether. |
5. After filling out what you've actually spent, scroll down to the bottom to see whether or not you went over or under budget.
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| I was $204.86 under budget! |
I'm always happy to see left over money and a plan that works and what you do with the money is up to you. Remember to keep it simple, don't spend money you don't have and you won't be in trouble.
Have a safe and Happy holiday!
Love,
- the plush duck
