The holidays are a time for joy and family. However, the prospect of purchasing gifts for your family, friends, neighbors, and coworkers is rightfully stress-inducing, especially for those struggling to improve their credit scores. Still, there is a way to tackle both things at the same time: buying presents for loved ones and keeping your holiday credit score from turning into a lump of coal.
Create a Budget
A budget only works if it’s well thought out and serves as an honest accounting of what you plan to spend. Preparation and research are involved in the crafting of a budget, so make sure to set aside a solid block of time for you to budget correctly.
The first step is to list everything you plan to spend money on during the holidays. This list should include more than presents, especially if you’re planning on hosting a party or traveling to visit friends or family. If you’re purchasing new holiday decorations, make sure they have an entry on your budget, too.
Try to really dig deep on this list and think of everything you’re spending extra money on. Things as small as that extra two-liter of soda for your father-in-law should be included or a higher-than-usual utility bill due to running your Christmas lights should be included on your list.
Once you’ve completed your exhaustive list of everything you’re spending money on this holiday season, it’s time to add up the costs. Keep a smartphone or computer nearby so you can research the price of gifts you’re planning to purchase. Once everything you’ve found the total cost, add to it another 10% of the total so you have some wiggle room should prices increase or something unexpected pops up.
While the total can be shocking, it’s more helpful to realize how much you expect to spend before you actually spend that amount. This will help you prepare by creating a plan.
Prepare with Savings
The fast-approaching holiday season always takes everyone by surprise despite its permanent status at the end of our yearly calendars. However, if you keep your eye on the flipping calendar pages, you can make saving for the season an easier process for yourself.
With your added-up expenses, you can now set a pace throughout the year for your savings. Of course, if you craft your budget close to this year’s holiday season, that may not but possible. However, you can use your budget for this year to estimate next year’s expenses, making it a simple process to set a savings goal.
If you have the whole year to save, you can divide your total expected expenses by the number of paychecks you’ll receive. This lets you know how much to set aside from each paycheck. Any bonuses or other surprise monetary gifts will also help you meet your goal.
One of the best ways to automate the savings process is to set up a direct deposit process with your work that puts the amount you need to save in a separate checking or savings account. You can also set up automatic transfers with your bank. Putting your savings in a separate savings account helps remove temptations to spend it. You’ll also earn interest on your balance, which can help with any surprise expenses.
Shop with a Plan
You’ve budgeted, and you’ve saved, so now it’s time to shop. Starting early can help you avoid the mad rush that occurs in the last few weeks before the holidays. You can also scope out deals or sales that occur throughout the year. Some large items have certain seasons where they are typically less expensive, such as televisions during the late winter or early spring. By planning for sales seasons, you can help yourself pay less for gifts you’re planning to give later in the year.
As you make your purchases, make sure to keep track of how much you’re spending. You may find that your sales stakeouts are helping you keep severely under budget. Again, that can help with unanticipated purchases later in the year or help you pay down debt. If you find yourself spending more than you planned, make sure to adjust your budget elsewhere.
If you’re nearing the end of the year and realize that you just don’t have the money to get as many presents as you initially planned, that’s okay. Budgets are living documents and it’s impossible to predict everything you’ll need to spend money on throughout the year. However, you can employ some creativity and DIY solutions to make up any present deficit. These gifts also have the benefit of being heartfelt and personal, which means their value will far exceed what you spent on materials.
Boost Your Credit
If you’re concerned your post-Christmas credit score has taken a tumble, try our online tradeline assessment. By answering just a few questions, we help determine whether purchase tradelines may help boost your score. Make sure to also check out our blog. We’ve published articles on the intricacies of a credit score, how to improve your score, and methods to manage your debt.