Financial Responsibilities during the Holidays

Money is a major stressor. In fact, finances top the list as the biggest source of holiday strain, according to a recent Mental Health America survey. And it makes sense.

Take gift-giving, for instance. “Holiday gift giving is often a very public event, fraught with comparisons, excitement, and disappointment,” said Jonathan Rich, Ph.D., psychologist and author ofThe Couple’s Guide to Love & Money. Pricey presents tend to disappoint less, he said. “So we often go way over budget because it’s such a pleasure to give a thrilling gift and so distressing to give a gift that disappoints.”

Overspending for the holidays can leave you super stressed, in debt and pinching your pennies on the more important things. But you don’t have to feel like a slave to Santa’s wish list. Below are 10 ideas to help you reduce your spending, create a budget and fret less about your finances.

1. Set a budget.

Setting a budget for the holiday season is a good starting point for keeping expenses at bay. Remember that holiday spending is “just part of your larger financial plan,” Rich said. And “your holiday budget needs to be a portion of your discretionary income.”

Some debt may be inevitable, Rich said, but keep it in perspective. “Don’t jeopardize [your children’s] college fund to get the latest and coolest expensive toys.”

2. Have an easy way to track expenses.

There are many methods for recording your expenses. The best systems are the ones that work well for you. “Some people use envelopes that they fill with cash for various discretionary expenses during the month,” Rich said. “Others are more comfortable with software that tracks spending and expenses.”

3. Be realistic.

Many people try going cold turkey with their spending. But deprivation often backfires—and sometimes in a big way. Instead, Rich suggests readers allow for “occasional indulgences so that you don’t become frustrated or go on a spending binge.”

4. Create and regularly review financial goals.

Having short- and long-term goals is key to smart spending, Rich said. If your priorities are fuzzy, how do you know when to save, spend or splurge? Plus, a lack of financial priorities makes budgeting pointless. “Without concrete and desirable goals, a budget is just drudgery,” Rich said.

He explained that your short-term goals might be anything from buying an “electronic gizmo you have always wanted” to “taking a vacation.” Long-term goals might be saving for retirement or a down payment.

5. Identify your values.

In order to budget effectively, it’s important to carefully and thoughtfully consider your personal values. What matters to you most? Do you have a hobby or two that you’d like to spend some money on? Do you want to donate to your church or a favorite cause? Is it important for your kids to attend private school, play the piano or take tennis lessons at a particular academy?

Without principles to give you perspective, you’re more susceptible to financial setbacks. As Rich said, “if all you are doing is budgeting, you are destined for a financial “’relapse.’”

“Overspending to impress your friends and neighbors is a short-lived pleasure. Under-spending so that you work less and have more time to be with family and doing other activities that you enjoy has more potential for generating long-term happiness,” he said.

6. Don’t forget the true meaning of the holidays.

While it’s obvious, it’s easy to get wrapped up in the holiday hoopla and forget that this season goes beyond gifts, fancy decorations and lavish parties. “The holidays are a time when families come together and celebrate their common cultural and religious traditions,” and these moments provide priceless opportunities to reconnect, Rich said.

“It is a time to let go of resentments, appreciate the people in your life, and reach out to people that are less fortunate. It is a time to appreciate spirituality, eternity, and to regain a sense of perspective.”

He also gave several examples of meaningful experiences (which don’t cost a thing!): “reading or watching holiday stories or scripture, baking holiday treats, singing carols and hymns, putting on plays, making decorations, and giving time to a charity.”

7. Have a plan.

As you shop, it’s tempting to toss your budget rules and buy what you see. The best way to prevent a shopping mutiny is to have a plan. Master Certified life and career coach Kristin Taliaferro recommended readers make a list of everyone you’re purchasing presents for, along with how much you plan to spend. Then add up the total. “If you can live with that number, great; if not, make some cuts,” she said.

8. Only buy stuff on sale.

“Make it a rule to only purchase items on sale or with a coupon or don’t buy it,” Taliaferro said. While you might have to adjust your gift ideas, you’ll end up saving money, she said. Taliaferro also offered a great tip for finding coupons: “If there’s a retailer you like, Google their name and the word ‘coupon’ and the current month and year.”

9. Find what works for you.

When spending smart, the real secret is to find solutions that work successfully for you and your family. For instance, Taliaferro suggested carrying cash to shrink spending, which is an effective budgeting tool for many people. “The advantage is that it provides a convenient way to track what you have spent and how much you have left,” Rich said. Shopping online? “Consider buying a VISA gift card now for yourself,” Taliaferro said. “If all else fails, hide your credit cards until January.”

By using cash (or gift cards), the theory is that when the money runs out, you’re done shopping—that’s if you don’t run to the ATM to restock “to buy ‘just one more thing,” Rich said. So this may not work for everyone in curbing spending. It doesn’t for Rich. “If I have a wad of cash, I find myself going through it quickly.”

10. Take it easy.

As Rich said, “Make financial decisions around the holidays that you can live with, but then do your best to put financial thoughts and worries aside.” These concerns only spike your stress level and make you lose sight of the holidays. Here are five ways to minimize worry and anxiety.