With the Christmas Season rapidly approaching and inflation at an all-time high you may have already thought about your shopping budget. If you haven’t already allocated your Christmas dollars, then stop what you’re doing and open an excel document (or this Budgeting App from our friends at Ramsey Solutions.)
How much to spend on Christmas?
According to data from National Retail Federation, Americans spend an average of $997.73 on gifts and Holiday items each Christmas season. That figure comes in just under the median pre-tax weekly salary of $1,001. It may not be surprising that the average American spends 25% of their December income on Christmas gifts and decorations, but if you’re honest, it’s probably unplanned overspending that’s got you feeling a little stressed out as the calendar marches on toward December. The recommended maximum for Christmas spending is 1% of your annual salary. Following the above example, if you make about $50,000 a year, then you should spend no more than $500 on Christmas expenses this year.
As proponents of Dave Ramsey’s debt-free model of living, we at Whitaker Myers want all our clients to live financially independent lives. An important piece of that is getting through the Christmas season without taking on more consumer debt by setting a budget. Here are a few tips to help you avoid the post-Christmas blues and a big lump of buyer’s remorse.
Make a Budget and Stick to it
This might seem like an obvious one, but if you haven’t set a budget then you will likely spend more than you want to (or should) on Christmas. If you have a generous heart and enjoy giving gifts to loved ones, then you are even more inclined to overspend, even if it’s out of the kindness of your heart.
Start with the dollar amount you’d like to allocate for spending. Once you’ve determined how much you’re comfortable spending, make a list of everyone for whom you plan to buy gifts. Budget a specific amount per person and stick to it. If you don’t like giving nick-nacks then consider gifting experiences or making something that will save you some money, without sacrificing thoughtfulness. Remember the 1% rule when making your budget.
This spreadsheet is a great way to make a plan for who you need to shop for and how much you would like to spend on them. Putting a dollar amount next to their name before you even start shopping helps you be more intentional with your holiday spending and shopping.
Save all Year
It might be too late for this one in 2022, but it’s never too early to start planning for 2023. You’ll be more equipped for staying on a budget if you have the funds already earmarked for Christmas. You can start a separate Christmas savings account which would be considered a sinking fund. We have multiple articles about sinking funds including one that explains what they are and one that discusses if they should be invested.
Don’t forget that you can even use a brokerage account for short-term savings goals. One of our financial advisors can help you allocate that money into wise investments for short-term objectives like saving for Christmas (or buying a home, car, appliance, etc.)
Don’t Overindulge
Those of you who are familiar with Dave Ramsey know that baby step two is all about getting out of debt. He advises people to attack their debt with “Gazelle intensity,” sacrificing in the short term to get rid of debt and live financially independent lives. At the core of this step is the avoidance of overindulgence. This is a major key to saving as well as paying off debt. If you are able to make more meals at home, watch old DVDs instead of paying for that subscription, and wear that old Christmas turtleneck in lieu of springing for a new cardigan, then you will be well on your way to freeing up some cash for your Christmas budget. It’s important to be critical with your spending, always asking yourself, “do I need this?” The answer is probably “no.”
If you struggle with budgeting, talking with a financial coach might be the right move for you. At Whitaker-Myers, we strive to help our clients get debt-free and start living their lives financially independently. Among our many services is financial coaching. If you want to talk to a financial coach about your budget, reach out to us today.
STAYING ON BUDGET THIS CHRISTMAS
November 17, 2022
Nick Allen
Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.
Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.
Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.
Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.
