Nov 2, 2009 6:05 pm US/Eastern
Smart Ways To Budget Holiday Spending
BOSTON (WBZ) ―
Wendy Gomez says her daughter is at the age where she is just starting to understand the holidays mean presents, and lots of them. "That's just not what it's going to be this year, simply because it can't be," she said.
Wendy, who was recently laid off from her job as an attorney, is going out on her own so money is tight. "It's definitely been a change," she said.
A lot of families are working with smaller budgets this year, but certified Financial Planner Patti Brennan says they still have time to save for the holidays. "When it comes to the holidays limit spending to 1.5 percent of your annual pre-tax income," she explained. "So for a family earning $50,000 a year, that would give them $750 allocated for the holidays."
It's easier if you put money aside all year, but if you are just getting started, you might need to adjust your goal.
You can also cut spending to free up more cash for gifts. Try eating at home more often and limit discretionary purchases. Then make a plan and stick to it. "The best method is to set up a register, it's as easy as four to five columns and say this is the person I want to buy for, this is the item and this is my budget," she said.
That will help you avoid overspending or shopping at the last minute.
You also might want to consider gifts that are free, a coupon for babysitting, housework or homemade meals. If you are buying, try a gift that keeps on giving, like a savings bond or another savings account. "A lot of mutual fund companies require only a $25 minimum to get going and it really is sending a message that you care about that person, not just today, but forever," Brennan said.
Whatever amount your family saves should cover everything, including the tree, decorations, dinners out and holiday outfits.
Wendy is trimming her tree with what she has and she's staying positive. "It'll be more about what the holiday should mean in terms of family and getting together and showing your love and appreciation for what you do have," she said.
Because of the economy, retailers are being very cautious this year. They don't want to be stuck with excess inventory so you may not find that unlimited selection that we've grown used to. Experts say that will also mean fewer of those deep discounts in the days just before Christmas.
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