Chances are, you are probably trying to get your Christmas list together for the year. The last thing you are considering is what you will do for Christmas next year. But, if you want to reduce the financial stresses that can come with the holidays, planning now is a good way to get ready for next year. Here are some things to do this year as you get ready for the holidays, and consider preparing for next year:
Figure Out What You Already Have
As you prepare to wrap presents, go through what you already have in terms of wrapping paper, bows, ribbon and even tape. Use what you have already, and make a list of what you might need next time around. Then, wait until after Christmas to head to the store and stock up on what you will need.
This tactic also works for Christmas decorations and ornaments. If you have too many Christmas ornaments, you can sell or donate them (get a receipt for their market value and deduct it on your taxes) to make room for what you find during the after Christmas sales. We haven’t had to buy new wrapping paper, Christmas cards or decorations for about two years because we know what we have after buying in bulk at a massive after Christmas sale during the recession.
Begin Budgeting in January for Christmas
As you buy Christmas presents, and as you purchase food and other requirements for holiday entertaining, keep track of what you spend. This will help you determine what your normal costs are likely to be. Take that amount, and add 5%, then divide by 10. If you spend $800 this year, you add $40 (5% of $800) and then divide the $840 by 10 to get $84.
Each month, you put that amount into a high yield savings account. By the end of October, you will save enough for your Christmas spending next year. This can really take the financial stress out of the holidays, since you will have the money you usually spend already in hand.
Use Credit Card Spending to Reduce Christmas Costs
You can plan to use credit card spending to help you pay for Christmas next year. Consider your budget. Put your purchases, bills and other items on your credit card. As long as you are living within your budget, you can pay off the credit card balance each month, avoiding interest while your rewards add up. Carefully consider a rewards program that offers cash back or gift cards. When you get cash back, you can put the money into your high yield Christmas fund account. If you get gift cards back, try to choose stores where you are likely to get gifts.
As with many things related to personal finance, proper planning can lead to big savings. Get ready now to start a new holiday tradition: Year-round Christmas planning to save money.