We all know that the holidays can be a huge expense. There are gifts, decorations, holiday cards, food, and a ton of other expenses that can quickly add up. If you're not prepared, these expenses can wreak havoc on your budget. However, a little planning can help you avoid both the stress and the strain on your budget that holiday expenses can create.

In the 3rd and final episode of our 3-part series on holiday spending, we'll discuss how to better prepare yourself for next year's holidays.


Transcription:
Hi, I’m Carly Cherry for Cambridge Credit Counseling, and welcome to Personal Finance 120 – information for managing your financial life in about 2 minutes. Today we’re finishing up our holiday series by talking about ways to help you prepare for next year’s holidays.

If you watched our last video, you know we talked about the importance of preparing a budget for your holiday spending. Although it may be a little too late to establish a solid plan for this year’s holiday season, it’s never too early to start thinking about next year. The one thing you’ll want to avoid at all costs is creating additional debt just to get through the holidays, and a little planning can help you to avoid it.

(On-screen graphic: Journalize your holiday spending.) Start by journalizing all of your holiday spending for this year. Write down everything you spend money on this season, including decorations, holiday clothing, food for parties, and all of the gifts you purchased. This will give you a pretty accurate starting point for next year’s budget, and it will help you determine how much you need to save throughout the coming year. Once you add up all of these expenses, you may find that you’re spending more on the holidays than you thought, and you can start looking for ways to reduce your overall spending for next year.

(On-screen graphic: Set up a separate savings account for the holidays.) Set up a separate account just for holiday spending, and keep in mind that holiday savings should be in addition to your regular savings, which shouldn’t be accessed just to get through the holidays. Although not as popular as they used to be, a Christmas club account is one type of short-term savings account that you can use to save money throughout the year for holiday purchases. They don’t pay a lot in interest, but they still work. If you’re not sure which type of account is best for you, talk to your bank or credit union about the different savings options that may be available.

(On-screen graphic: Start saving today.) Experts predict that the average shopper will spend roughly $800 this year on holiday expenses. Instead of trying to come up with this money a couple of months before the holidays, start saving now. If your holiday budget is $800, depositing $15 per week into a separate savings account or Christmas club account is all you’ll need to reach your goal.

This video concludes our three-part series on Holiday Spending. Tune in next week when we’ll discuss how taking some simple steps to prepare your home for the winter can save you money. Until next time, I’m Carly Cherry with Cambridge Credit Counseling.