Monday, November 30, 2009

3 Easy Tips for Making and Keeping a Holiday Budget

3 Easy Tips for Making and Keeping a Holiday Budget

Believe it or not, it’s that time of the year: Christmas is right around the corner! And you know what that means, right? Holiday shopping for friends and loved ones. Today I am going to share with you a very simple but extremely effective way to go about this process that some approach with dread and loathing, while others find the whole exercise therapeutic.

FIRST, understand that a gift is a GIFT. By definition, a gift is something you give freely – with no recompense (i.e., there is no expectation of receiving anything in return). Understanding this will go a long way toward helping you avoid the unnecessary pressure and stress that people often subject themselves to when it comes to holiday gift-giving. Contrary to what some believe, I am of the opinion that the size and/or value of the gifts carried in shopping malls CANNOT and DOES NOT even come close to matching the care and thought that cause people to want to give Christmas gifts – or any other gifts – in the first place.

What I am suggesting is that you avoid getting bogged down by the “hot and trendy today” and “must-have gifts” crowd at the risk of running yourself and your family into financial hell. I don’t know about you, but personally, some of the most precious and memorable gifts I have ever received (and still cherish to this day) actually cost only the price of a sheet of white 8½-by-11 paper and some crayons. The pages contain words – some incorrectly spelled – and images I could not decipher until they were explained by the giver. Take a moment to look back into your own life and ponder whether you have ever received similar treasures.

Don’t get me wrong: it is OK, perfectly fine, even terrific to give your wife a diamond necklace for Christmas. HOWEVER, there is also nothing wrong with giving her a handwritten note telling her how much you love and appreciate her. I’m willing to bet you’d be pleasantly surprised to find that the latter gift ended up earning you more mileage and goodwill than you could ever have imagined. Likewise, it’s great to get your dad a nice watch, but it’s an equally good idea to write him a note thanking him for all he’s done for you and telling him how much you respect and admire him. OK, first point made – a gift is a gift.

SECOND, write down the names of those you intend to give gifts to.

THIRD, next to each name DO NOT write the item you intend to give them. Rather, write down HOW MUCH you intend to spend on each recipient. Then add them all up to find your total potential gift expenditure. I will leave you to determine the rest of the process, as it relates to arriving at the total figure you are willing AND able to spend, because only you can make that decision.

Again, a gift is a gift, so once you have arrived at the total dollar amount you are comfortable with, go ahead and knock yourself out to purchase whatever meets the amount you've allotted for each recipient on your list.

Other people no doubt have their lists, too. But the vast majority of theirs indicate names and items, not names and dollar amounts. The result is that they spend whatever those gift items cost. You can see the difference – and understand why I advocate the exact opposite.

To use my favorite words again, it’s just plain common sense! You have it, so use it. Be safe and have a great time with your holiday shopping!!

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  1. I totally agree with your philosophy - the gifts of love and appreciation are priceless. Over the years I have developed standard amounts I spend on friends and family. Recently I told some friends and family we have enough stuff - let's just get together and enjoy each other's company instead of gift giving - let's give ourselves to each other. That is what is most important. Parrotluv

  2. this simple yet an amazing piece of real life financial advice. if only people could get advice from truly smart advisors like you, so many of us would not be in the financial hell we find ourselves in sometimes. Your blog in general is very practical.


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