Budgeting for the Holidays

For many people, money is tight this holiday season. Luckily, there are some ways to reduce some of your costs while preparing your holiday budget. It might sound corny, but if you have a skill (knitting, sewing, woodworking, painting, etc.) making gifts for those on your holiday gift list is a great idea. Anyone could go to the store to purchase a holiday candle set, but not everyone can paint a beautiful landscape or knit a fashionable sweater. Your friends and family will genuinely appreciate the time, effort, and skills that you put into making their gifts even more than they would apprecaite a store-bought gift.

Experts say that by compiling a strict list of who to buy gifts for and how much you want to spend per person, you will end up spending less money. If you find an item on sale, don't feel obligated to make up the difference by purchasing something else to spend your per person limit. While shopping, if you remember someone else you need to buy for, add them to your list, but avoid impulse buys. When setting spending limits, stick to them.

It is a little known fact that people tend to spend more money with a credit card than if they paid with cash alone. This statement holds true even when a budget has been set, so if you plan on using a credit card, make sure to stick to your budget. Be sure to keep in mind that stores offering you a percentage discount on your purchase if you sign up for a store credit card aren't just trying to be kind. The stores know that they will make much more money in interest from the card then the discount you would recieve. You should try to avoid store cards, especially if you aren't confident in your ability to pay them back fully, and on time, each month. On August 22, 2010, the Federal Reserve Board finalized a set of new regulations that credit card companies are forced to comply with. Even with these regulations in effect, credit card companies are still more than able to make money by charging you interest and fees. It's a little too late this year, but after this holiday, try to stash a little bit of money aside every month to cover Christmas expenses instead of relying on credit cards. 

Gifts aren't the only expense many of us incur over the holidays. Don't forget to figure in the cost of baking supplies for the holiday cookies, and the cost of the holiday feast. Travel costs are always on the rise, so if you are planning to visit family and friends that live out of town, be sure to figure in the expense of your trip into your budget. For more help figuring out a holiday budget, click here for an interactive budget calculator on our website. 

When thinking of the holiday season, most of us think about what we can give to those around us. We like so surprise co-workers with home-made cookies or gifts, give our pocket change to the Salvation Army volunteers, or donate our time and money to charitable causes. We treat our families lovingly, and tell our friends how much we care about them.  In the back of our minds, many of us are guilty of dreaming about the gifts we hope to receive. These things are all stereotypical of holiday thoughts and actions and are what make the holidays so special.

For others, this is the ideal time of year to try to benefit from our hard work. The holiday chaos can be a big enough distraction for some not to notice that bill collectors are calling about an account that shouldn't exist. Some people can be so busy with shopping, baking, and wrapping that they don't notice that there are fradulent charges on their credit card statements. This is what identity thieves are hoping for. 

Don't be a victim of ID theft; though this time of year is hectic, make time to check your credit card and bank statements. When talking to banks and credit card companies, listen to what they are saying. If you notice anything out of the ordinary, contact the bank or company immediately for assistance. Always be wary of online shopping. Check to be sure the website is reputable before you enter credit card information. Many sites have a security logo that states the last time the site's security was verified, so take advantage of that. Visit the Federal Trade Commission's website to learn more about identity theft and how to avoid becoming a victim. As always, it is a good idea to shred documents containing account numbers and personal information to further help protect your identity, especially over the holiday season.

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