With the holiday season right around the corner, you’re probably starting to think about that shopping list. Take control of your holiday spending, by making sure you're in control of your overall budget. Here are some tips to turn this holiday shopping season into a springboard for year-round financial health.
Prepare to spend and resist spending
LaTisha Styles, a financial blogger for YoungFinances in the Atlanta area, recommends putting together a list of all the people to be included in your gift giving and then allocating the total amount to be spent for the holidays. From there, she recommends working backwards, creating a budget for each person.
After deciding what to spend, look for creative ways to stay on top of your budget. Shopping early can help. “As the holidays get closer, you get into that excitement and you want to spend more,” Styles says.
Also, try to be a wise spender—not an easy task when faced with a barrage of holiday marketing, says John Schmoll, Omaha, Neb.-based founder of the popular Frugal Rules blog. He recommends sticking to planned purchases and not getting hooked in by bargains.
“Be careful of not overspending to get a deal,” Schmoll says. He tries to avoid spending more money just to get free shipping or other giveaways. “It doesn’t make sense to add another $30 to your order to get $10 off,” he says.
Use your smartphone wisely
Setting mobile alerts on a bank account can also be a useful tool to keep holiday spending in check. Many banks can notify customers via email or text if their account balance drops to a certain level.
“If you’re out shopping and you’re out for the day, it can be very easy to let slip by what exactly you’ve spent,” Schmoll says. “You think you’ve spent $100 or $200, but when you add it up it’s more like $500.”
Styles recommends opening up a second checking account just for holiday spending and then tying alerts to that account. It’s helpful to get a reminder when you’re nearing the end of your holiday spending budget, she says.
Maintaining good habits
After the holidays are over, Styles advocates keeping that second account open and using it for varying budget goals. Having a separate account, with the added advantage of alerts, allows more control over specific spending goals, while keeping everyday budgets from getting mixed in with specialty budgets.
In her own banking, Styles keeps one checking account for paying bills and regular transactions and another for holiday shopping or other specialty budget categories.
She also maintains two savings accounts: One for long-term savings and emergency reserves, and another for short-term savings.
Right now she has her short-term savings account labeled “Travel Fun,” which she contributes to regularly and withdraws from once every few months when she’s saved enough money for a getaway weekend or another splurge.
“This is specifically a short-term-goal savings account,” she says. “It’s my favorite account.”
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