Before you know it, the holidays will be here. Time for parties, good food, and all the gifts! If you become stressed thinking about how you will manage the financial aspect of the season of giving, CNET offers these six tips from the experts:
Set spending limits
Before you plan your holiday budget, now’s a good time to set expectations with your friends and family about gifts and plans, too, said Shang Saavedra, founder and CEO of Save My Cents, Inc…
Talk to your family now to set budgets for gifts. If you have a large family, you could suggest hosting a Secret Santa or white elephant, so each person is only buying one or two gifts. You can also use these strategies to save money if you exchange gifts at work or with your friend group.
Make a plan and stick to it
To curb overspending, create a plan and adhere to it. It can be tempting to spend a few more dollars to get someone a gift we really want them to have, or because it’s a good deal. But the budget can help curtail overspending and let you creatively think about how to stretch your savings.
Torres recommends starting with a list of people you plan to buy gifts for, setting a clear budget for each person, and shopping sales to save on gifts.
Create a sinking fund
A sinking fund is a savings account where you stash money for something you’re looking forward to, like an event, vacation or even the holidays. If you don’t already have one, a high-yield savings account is a great place to stash savings because it pays a higher interest rate than a regular savings account, said Saavedra…
Lanesha Mohip, a corporate accountant and financial educator, recommends opening a new savings account to keep your holiday fund separate from your other financial goals and accounts. “This is an easy way to reduce impulse spending while ensuring your priorities are being taken care of,” she said.
Automate your savings
Saving money can feel like a chore, but automating your savings takes some of the hassle out of it. Every dollar adds up to help you comfortably afford gifts, travel and decorations.
Saavedra said that contributing money monthly can help you have more set aside and avoid taking on debt. She recommends making regular contributions to your sinking fund each month based on how much you plan to spend. Setting up automatic transfers to your savings can make this easier…
Put your money in a short-term CD to avoid spending
If you have a sum of money already set aside that you’d like to earn guaranteed interest on and want to avoid spending, you might consider stashing it in a one-month or three-month certificate of deposit. CDs let you lock in an interest rate when you open your account, in exchange for leaving your funds in them for a set period of time…
CDs are a great option if you want to trick your brain into not touching your savings, said Saavedra. “You’re given this set time where you feel obligated to commit the money to the CD and wait,” she added…
Shop early, but continue saving
Should you start shopping or saving now? Mohip said a little of both is a smart way to save money without depleting your savings and to take a balanced approach that best fits your lifestyle.
Another reason to shop early? Mohip said it gives you more time to maximize credit card rewards, cashback programs and other savvy savings strategies. Since holiday shopping deals start rolling out early in the fall, taking advantage of them can also help you stick to your budget.
You can read the full article here.
If you follow even a few of these suggestions, you’ll be well on your way to a debt-free, stress-free holiday season this year!