Navigating this holiday season on a budget and without financial stress.

It’s the most wonderful time of the year…

Since I was a little kid, I loved the season of the holidays. Obviously as a kid, you look forward to playing with your Christmas gifts, but for me it was more than that. During the holidays families come together; Mom is willing to cook the best meals, Dad is usually very flexible in what he allows us to do and in general, people are happier. Growing up in West Africa, we did not have snow. However, the TV channels would somehow show Christmas movies such as Home Alone with plenty of snow. I would watch these movies with actors dressed in coats, families gathered around the chimney and kids playing with snowmen. Then when I stepped outside, it was 85 degrees. As a very curious kid, I guess this contrast created in me a desire to experience the holidays in cold weather and everything that comes with Christmas.

Fast forward 20 years and I realized one thing: Christmas and the holidays season are a phenomenon in the US. Every year, I am amazed at how early the retail stores start playing Christmas music and decorating for the holidays. I was at Home Depot a few days before Halloween and an entire segment of the floor was already dedicated to Christmas. As a society of consumers, we have extremely commercialized the season and forgotten what it is truly about.

  • In 2015, Americans spent an average of $830 on Christmas gifts. That was an increase of more than $100 over the $720 of the previous year.
  • A Gallup research poll showed that 30% of people planned to spend $1000 or more on Christmas gifts.
  • People earning less than $30,000 per year spent an average of $460.
  • This year, millennials plan to spend an average of $1,427, a substantial increase over the $1,072 spent last year.

In a nutshell, we spend a lot on Christmas. The problem is that many of us spend without planning. Thus, the first few months of the next year are navigated trying to extinguish a financial fire. Did you know that for more than 25% of people, it will take more than five months to pay off holiday debt?

Black Friday and Cyber Monday are just around the corner. From a banker’s perspective, the days following those two are the worse. Why? Because I receive too many requests for overdraft fee waivers, transaction disputes and payment returns. Unfortunately, the majority of these incidents are due to lack of financial planning and those requests are often declined. So, this year let’s change things. It’s time to have a smooth financial ride through the holiday season. How?

Establish a budget

Christmas lights lighten the mood. The music is soothing, people are happy and they are often nice to each other. Everywhere, shops and stores have new items for sale at a very discounted price. In such an environment, it is easy to fall for the temptation of ‘saving money’ when really, we are simply spending less than we would at a different time. The best way to stay on track is to establish a budget. How much can you afford this season on gifts? How much would you like to spend without incurring debt? If you have to take on credit card debt, how much will you be able to pay off in no more than 60 days? Set a limit for yourself and be true to it.

Make a list of the people you would like to bless this year and how much you would spend on each

At Christmas, we bless each other with gifts. It is part of the American culture. That’s what we do. Along with a budget, it is smart to set the amount you would spend on each one of your family members, friends, coworkers, etc. This practice will help you stay within budget and avoid spending too much. If you have already decided to spend $100 on your sister Hannah, it is much easier to not fall for the temptation of getting her a $200 purse on sale for $150. One very effective practice that Heather and I have implemented over the past few years is to ask our family for a list of their gift wishes for Christmas. Whether it is a list of 5 or 15 items, we get to decide what we want to give them based on our budget. Regardless of the outcome, they are still happy and thankful because we got something on their wishlist.

Give back and reflect on your own blessings

The holiday season is a great opportunity to give back. While millions of dollars are spent on gifts, there are people who suffer emotionally, physically and financially. Look around and you will find pain. It is a great opportunity to do good. Moreover, when we make it a point to give our time and/or money, subsequently we manage those precious commodities better. Giving takes discipline and when you are disciplined, you are more responsible with your money and time. Many of us will receive unexpected bonuses and extra commissions this time of the year. Let’s remember the less fortunate and put a smile on those who otherwise would be suffering.

Set your 2017 money goals

Don’t wait until the 1st of January to set your goals. Start now. Did you achieve your goals this past year? How much savings did you end up with on December 31st? How much would you like to have saved next year by December 31st? How much would you like to comfortably spend next Christmas? Think on those things now. Have the difficult conversation with your spouse. Delaying does not help. Once you have a goal, establish a plan to accomplish it that is practical.

One of my colleagues once told me that she has a savings account dedicated to holiday shopping. Throughout the year, she deposits money into that account exclusively for her Christmas shopping and other expenses during the season. I think this is an excellent habit. If your goal is to spend $500 on Christmas gifts next year, it is much easier to save $50 per month over the next ten than to come up with $500 next November. Try it and see if it works for you. I believe it will.

I hope you apply these four easy steps to navigating the holidays with financial responsibility and on a budget. It is a time to enjoy family and friends and not be stressed about money.

I wish you a wonderful time with your family and friends this Thanksgiving. Reflect on the things you appreciate about your life and bless someone.


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