Pinching Pennies This Holiday Season?
By Dara Duguay
Winter 2008-09
Christmas was only a month away as Stephanie and John discussed their options to deal with their financial dilemma. Since they had neglected to save money for the holidays, they decided that this holiday season would be very difficult to fund. They promised each other that they would not succumb to the path that many of their friends had chosen: paying for everything on credit!
Ever resourceful, Stephanie nevertheless was determined to make the season joyful. She told the children that the family's holiday season this year would last a whole month instead of just one day.
For the next four weekends, the family attended a different community event – a tree-lighting ceremony, a multicultural caroling evening, a holiday book reading at the library, a visit to a downtown skating rink. Stephanie enlisted the children to help bake cookies and festive breads they wrapped and delivered as gifts to friends and family.
Meanwhile, Stephanie and John promised each other not to exchange gifts this one time. They would make it up to each other when their finances had stabilized. They would keep costs under control by collaborating on their purchases rather than seeking separate gifts for the children.
After the holidays, daughter Sandra had to present a speech for her class at school detailing what she did during her holiday break. She excitedly shared with the class her family’s month-long celebrations and how she had enjoyed this special time with her parents as much as the presents she received.
Sandra’s teacher was so inspired by this creative approach to making the holidays affordable that she compiled a list to share with other parents who may not have a lot of money to spend on holiday gifts each year. She solicited ideas from other teachers, resulting in a long list full of creative and helpful tips.
Here are just a few:
Start planning early; January is best! Review your cash flow and set up a monthly savings plan. Look for ways to cut your spending so you can save a little bit each week. These small savings deposits will go a long way toward reaching your spending goals by December.
Determine how much you have to spend, and then spend only the money you have. Increasing balances on your credit cards by charging gifts you cannot immediately pay off will only add to the cost of each item. If you are tempted to add your purchase to your credit card, mentally calculate the true cost as roughly 19 percent more than the price tag.
Make a gift list. Maintaining a list along with a dollar limit can help you avoid impulse buying. Take the list with you every time you go shopping, and don't buy anything that isn't on it.
Comparison shop before you actually buy anything. Write down ideas – and prices – for everyone, then organize your list. Are there stores where you can purchase the same items for less?
Avoid procrastinating. This will keep you from succumbing to panic shopping, where you rush to buy without paying attention to your budget.
Know when to stop! Six to eight weeks before the holidays, stop buying all but the most essential family purchases.
Consider creative gift-giving alternatives such as "Secret Santa," a re-gifting exchange, a dollar-limit challenge or a pooling of funds to skip the presents and take a trip. (This may be unrealistic if children are involved!)
Once you've completed your shopping, take stock. Shut yourself in a room and lay out all your gifts. Have you overbought? Are there some items you could put away for a future birthday or for next year?
Take advantage of post-holiday sales. Buy wrapping paper, ribbon, cards and other supplies you will need next year, and store them where you will be able to find them. Consider purchasing non-perishables that will be "evergreen" the next year: holiday-themed books, games, decorations, etc.
Make the holidays special by sharing with others. For example, your children can collect toys they no longer use and give them to a charity. Spend each holiday weekend as a family enjoying holiday events together. These steps can help make the holidays meaningful – and shift the emphasis away from “stuff.”
Give your children the gift of learning how to save. Open a savings account for them even if you only have $50 to start. It’s a gift that will last a lifetime.
Be honest and open. If you are watching your pennies this season, let your family and relatives know. This may be difficult and embarrassing to share, but the best gift you can give your family is financial stability.
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Dara Duguay is Director of the Office of Financial Education for Citi and the author of several self-help personal finance books. This article is excerpted from “The Citi Commonsense Money Guide for Real People.” Military Money readers can order it at a VIP discount from www.commonsensemoneyguide.com.
