Will You Avoid A Financial Hangover?

by Christine

I love the Christmas season. I love giving gifts. I don't love the financial hangover that can result when combining the Christmas season with gift giving. I made the decision to live debt free 17 years ago. That means when I use my credit card, that I must be able to pay off the bill when the statement arrives. I save for large ticket items that I want and purchase them only when I have the money to pay for them. My philosophy is pretty straight forward and I have developed the discipline to adhere to my code. 

But Christmas giving hits all kinds of emotional buttons. We want to see the delight in the eyes of our children or grandchildren when they look upon all the gifts around the Christmas tree or as they are opening their gifts. Also we want them to avoid feeling the disappointment we once felt at not receiving the toy of the year.  We want to bring joy to our extended family as well as friends. The list grows longer as we add the mail carrier, hairdresser and other service people in our lives. There are those we truly want to give presents to and then there are those we feel we are obligated to acknowledge at the holiday because of some unspoken expectation. 

If you want to avoid the financial hangover groaning in January along with the high interest rates in February and beyond then taking the time now to plan is imperative. I have a few long-term and short-term ideas of managing your money during this gift-giving season that can take some of the financial pressure off you. 

First the long-term ideas. Create a budget and stick to it. This tool helps you know what you have to spend and can keep you from going overboard. Don't think of it as something that limits your spending but allows you to purchase gifts guilt free because you know exactly how much you have to spend. 

Next, open a Christmas Club Savings Account today...for 2013. I can imagine you feel that a lot of cash is already going out now but to get control of tomorrow you must start today. You can put $10 a paycheck in the account now increasing it later in the year based on your budget. Learn how to open a Christmas account here.

Shop during the year for Christmas gifts. I know this takes a certain personality type to shop proactively and keep quiet about it. My mother was like a little girl when it came to Christmas. More than once she would say, "Don't tell your father" and proceed to tell us all about our Christmas gifts. The positive side of shopping year round is that you can take advantage of sales and avoid hitting your wallet all at once. 

For the short-term you can do a couple of things. First, review who is on your list. For years we gave gifts to everyone in our extended family. When the current generation came of age, we discussed how logistically and financially burdensome it was to be giving gifts to so many people. We enjoyed getting together for dinner and the gift exchange was fun so we decided to draw names instead of cutting out gift giving all together. We found a great deal of joy in finding the perfect present  but did not feel so strapped financially. I would encourage you to discuss this with your family; if you are feeling the pinch, I imagine they are also. 

I urge you to consider homemade gifts. I will write more on this next week but this is an area that creativity is more valuable than cash. If you have an aging parent, you know that they are letting the heavy lifting of cleaning slide. A gift certificate that promises a top-to-bottom kitchen cleaning is priceless.

Finally, just say no. Your child, grandchild or significant other doesn't need everything on their Christmas wish list. When I was growing up, we knew we would get one "big" gift and several other smaller ones, which may include pajamas. We understood that we were not going to get everything we wrote down on our list when perusing the Sears Catalog. 

I remember very few of the gifts I was given for Christmas. Yes, the bike and pogo stick come to mind but mainly I remember being with family. I remember decorating the tree, setting the table with the good china and the Christmas records playing on the Magnavox. Christmas is about celebrating the season and being with family. The New Year is about starting new, debt free.