Many families use credit cards to check off everything on their holiday shopping lists. However, if families do not have a well-planned budget, January can be rough when the credit card bills start rolling in. Karen Poff, Virginia Cooperative Extension family and consumer sciences agent, has some tips for planning ahead to avoid the January bills-are-due blues.

Determine the spending amount you can afford.

“Only you can decide the amount you can afford to spend on the holidays,” Poff said. Choose an amount that you can pay off as early as possible. An amount that can be paid back within a few months is ideal to prevent needless spending on interest. “The interest on credit card charges can add up to hundreds of dollars,” Poff said.

Many families spend 1 to 5 percent of their total annual income on holiday expenses. Whether you choose to stay on the lower or higher end of that range depends on your financial situation.

Take a look at expenses.

Poff recommends making a list of everything you will need to spend money on over the holidays: gifts, wrapping supplies, cards and postage, travel, and other things. Estimate how much each will cost and add them up. It is likely that this number will exceed your budget; if so, it is time to start cutting back. Prioritize your list and see where cuts can be made. For example, Poff suggests saving money on postage by sending holiday cards electronically. Small cuts to expenses can add up to help you keep your spending within your budget.

When you begin shopping, take along your list.

Take note of how much you budgeted for each item and stick to that price range. “Because you have planned ahead, you will be able to shop for items within your price range, look for bargains and sales, and reduce the temptation to spend beyond your limits,” Poff said. “If you overspend in one area, you’ll be able to easily see the need to cut back in another.” Poff recommends writing down the amounts spent on each item to see where you are coming in over or under budget. When you overspend in one category, cut back in another.

Use your experiences this holiday season to prepare for next year.

After the holidays are over, Poff encourages families to look at the total amount of money they spent. “This will help you develop a more realistic plan for next year,” Poff said. In addition, knowing the total amount needed for the holidays can guide you in saving for next year. Divide the amount spent by 12 and set aside that amount each month. By saving ahead of time, you can avoid credit cards altogether and enjoy a debt-free holiday.



Written by Allison Hedrick of Chatham, Va., a senior communication major in the College of Liberal Arts and Human Sciences.

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