Preparing for the Holidays

We’ve turned the corner from Halloween and officially hit the holiday season. Exciting…right? Well, statistics show that this is the time of year when people go broke. It’s not just gifts – it’s the entire environment. You have more time off work, you’re with family, you’re traveling, you’re giving gifts, and you’re buying for yourself. At the same time, retailers are turning up the heat. In 2010, holiday sales accounted for ~20% of annual retail sales – guess what, they live and die by the holiday season.

So do you get prepared? Throughout the holidays, I’m sure I’ll have a few posts on how to save but this one is all about planning. Yes, there is a way to have your cake and eat too during the holiday season – you just need to start early.

• Make the list: You probably already know who you’re buying for and what they need. Get that list on paper (or electronically) as soon as possible. For couples, use Google Docs to create a list you both can edit.
• Price the List: Go through the list and enter how much each item will cost for each person at current prices. This will give you a good starting point for your budget and also a great reference point for identifying real deals.
• Set a policy: Notice I didn’t say a budget. You will need a budget but, more importantly, you need a policy for how you handle going over the budget because it will inevitably happen. Where will the money come from? Which gifts do you exclude when it happens? It’s called prioritization.
• Set a budget: First, split between gifts and ‘extra’ spending. Most people are good about accounting for gifts but it’s the ‘extra’ spending that occurs as part of being off and with family that grows the credit card debt. Drinks, dinners, etc. – it’s all about to happen. Oh, by the way, add 30% to your budget. Now you’re a little closer to reality.
• Get Smart about Deals: Black Friday, Cyber Monday, After Xmas specials…retailers will be aggressive as always and you need to do your research. Over the next few weeks, retailers will start to release their Black Friday specials. Use sites like bfads.net, theblackfriday.com, and Black Friday@gottadeal.com to get news and tips.

Time flies and so will the next 2 months. With a little planning, you can enjoy the season and avoid the heartache of January’s credit card statement.

What other tips do you have for planning for the holiday season? How have you planned in the past?