<< Build Your Holiday Budget >>

 

Fall is the precursor to holiday spending and it’s your last chance to avoid holiday debt by forming a savings and spending strategy. According to 2011 TurboTax data:

Americans spent $516 on gifts for family, friends and co-workers, and purchased about $190 worth of decorations, holiday food and candy, greeting cards and postage last year.

Create a list of every holiday expense you foresee including:

• gift cards 
• stocking stuffers
• expenses related to holiday parties
• hostess gifts
• exchanges at work
• baking
• wrapping paper
• greeting cards
• and anything else that has historically snuck into your budget in the throes of the holiday rush.

Once you’ve arrived at a grand total, devise a personal savings plan with an end goal of early December so you can work towards it little by little. 

For example, a person with the “average” holiday spending profile above could bank the $706 by December 1st by setting aside just $23 a day, starting with Halloween.

In contrast, an unprepared holiday shopper charging that amount and making minimum payments on a “low interest credit card” (at a current annual percentage rate of 10.95%), would need more than two and half years—and an additional $115 in interest expenses to pay off the debt.

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