MoneyDo: Set A Budget For Holiday Spending
Thanksgiving is a wonderful time of the year when we traditionally spend treasured time with our loved ones. But there is another post-Thanksgiving tradition many Americans observe: shopping.
According to a recent survey, holiday spending this year will likely exceed 1 trillion dollars[i], but expectations are that most will not spend more than they did last year, when we averaged about $660 spending per person[1].
If we’re intent on reaching our financial goals, flattening our spending from last year might not be enough.
- Last year, 56 percent of holiday shoppers incurred credit card debt, up from 45 percent in 2015[2].
- Sometimes, the debt wasn’t immediately paid off – one recent study showed that some people are still paying off their credit card debt from last year’s holiday spending[3].
Set A Budget
Setting a budget now can help understand and set guidelines to manage anticipated spending.
- Your budget should be created from your disposable income.
- It helps to work backwards – look at last year’s spending and determine what you spent and use that as a starting point on where you should be last year. Did you spend too much last year? If so, how much did you spend in total?
- As a general “rule of thumb” we suggest your budget not exceed 1% of your gross salary. As an example, the median household income in the U.S. is just over $70,000 so spending on gifts shouldn’t exceed $700.
- Make sure holiday decorations and parties are also considered in your budget.
Check It Twice
Once a budget is established make list of who you want to receive a gift, and do the math to understand how much you’ve agreed to spend on everyone.
[1] https://www.nerdwallet.com/blog/finance/2017-consumer-holiday-shopping-report/
[2] https://www.nerdwallet.com/blog/finance/2017-consumer-holiday-shopping-report/
[3] https://www.cnbc.com/2017/11/17/shoppers-are-still-paying-off-debt-from-2016-holidays.html
[i] https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/deloitte-retail-holiday-forecast.html
