The holidays cost me a bundle this year, but I didn't let them wreck my finances.
The holidays are often called the most wonderful time of the year. To me, they're one part wonderful and one part expensive.
Don't get me wrong -- I love showering friends and family members with gifts during the holidays. It genuinely brings me joy to be able to do nice things for good people. But it also takes a lot of saving and advanced planning to get through the holidays without racking up debt.
This holiday season, in fact, I spent a little over $1,500 in the course of four weeks or less. But thankfully, I did it without wrecking my finances in the process. Here's how I pulled that off -- and how I managed to get past a few hiccups that drove my costs up.
I started saving in January
Though I have an emergency fund with money set aside for unplanned bills, I don't allow myself to use that account for the holidays. The reason? The holidays aren't an emergency, and also, they're not exactly a surprise. Rather, they come up at the same time every year, so there's ample opportunity to save for them.
What I usually do is to set money aside each month for that year's holiday spending, beginning in January. This year, I went with $100 a month, which didn't turn out to be enough, but I'll get to that in a minute. By putting that expense in my budget, I was reminded to send $100 a month into a dedicated holiday savings account.
I set spending priorities
Going into the holidays, I knew I had a specific amount of money earmarked for seasonal spending. I also realized early on that I'd need to spend that money judiciously if I wanted it to last, so to that end, I set priorities and skimped on or avoided certain expenses that other people tend to pay for at this time of year.
I was also relatively savvy when it came to shopping. Knowing full well that the best deals can't always be found on Black Friday or Cyber Monday, I started digging around for discounts in mid-November and continued doing so until mid-December, even if it meant cutting it close on the gift-arrival front.
I made quick adjustments when my costs came in higher than expected
As well as I thought I'd planned for the holidays, I did encounter a few surprise expenses that I neglected to save for. First, friends of mine asked me to participate in a gift exchange that wasn't part of my budget. I felt bad saying no, so I opted in. Next, I wound up hosting a Thanksgiving leftovers swap after a friend put the idea in my head and got me so pumped about it I couldn't not do it. While I didn't have to spend any money on food, buying wine and beer for a dozen people set me back another $50 or so.
Finally, just when I was convinced I'd finished buying all of my holiday gifts, I suddenly remembered that I'd neglected to purchase anything for the people who run my kids' extracurricular activities. I'd remembered their teachers at school, but not these instructors who no doubt deserved a little something around the holidays, too.
All told, I wound up spending over $1,500 on the holidays when I thought $1,200 would cut it. Rather than take that $300 from my emergency savings, I cashed in some credit card reward points to cover some of those additional expenses. I also canceled a couple of nights out with friends that probably would've cost $50 or more a pop to make up the difference.
Avoiding holiday debt
There's a lot of pressure to spend money during the holidays, but if you're starting 2020 with a pile of debt because of them, consider this your wakeup call to not have a repeat. By earmarking money in a savings account every month leading up to the holidays, I didn't have to worry about coming up with that $1,500 all within the same few weeks. And by setting priorities during the holidays, I made the most of the money I had available to me.
Of course, I did wind up spending a little more than anticipated, but ultimately, had that extra $300 or so been a real hardship, I would've said no to the gift exchange or not done the post-Thanksgiving gathering.
And that leads to one final point: One of the best ways to avoid hurting your finances during the holidays is to learn to just say no. Remind yourself of that when the 2020 season rolls around, because it could help you avoid a world of debt -- and a world of regret -- at a time when we're all supposed to be celebrating.