Weekly Feature

2010-12-01 / Business

BBB: Budget for holiday expenses

The holiday season is here, but unless you’re among a select group of people, sitting down and creating a budget is not on your list. Nevertheless, in tough economic times, the Better Business Bureau recommends that mapping out spending now will help ease financial trouble in January.

According to a survey by Consumer Reports, shoppers plan on spending a certain amount but when all was said and done, actually spent 16 percent more than they planned. Not many of us can go that far over and still remain in the black. Creating a budget and being disciplined enough to follow it, is one of the best ways to avoid overspending during the holidays.

“It many not be a festive way to spend an evening, but if you sit yourself down and crunch the numbers now you actually stand a chance to save yourself from a painful financial holiday hangover later,” said David Polino, Better Business Bureau president. “Most consumers are tempted with a deal and leave their good judgment at home, hence the overspending trouble begins. A budget can be your best friend this time of year.”

BBB offers five steps to keep from overspending during the holidays:

Consider your income. Measure how much money is coming in now and what will be available come January when the bills start rolling in. Add up salaries along with dividends, interest payments and other sources of income.

Add up regular expenses. Figuring expenses is usually harder than determining income because there are so many more factors to consider. Start with rent or mortgage, utilities and credit card payments. Also factor in other expenses for gas and car maintenance, health care and groceries.

Estimate extra holiday expenses. A lot of little purchases have a way of adding up over the holidays, and it’s important to consider all of the expenses of the season including:

Gifts - Estimate how much to spend for each person, including family, friends and co-workers. Also consider the cost for holiday cards and postage.

Entertaining - Budget for entertaining at home or for food and beverages to take to someone else’s party. Also, consider the costs for eating out and going to the movies—both popular expenses over the holidays.

Decorations - Take stock of what is already available and then consider any additional spending needed for a tree, lights, ornaments or wrapping paper..

Travel - If heading out of town for the holidays, consider the cost of travel plus car maintenance or pet boarding, if applicable.

Charitable donations - Budget how much to donate to a worthy cause. Learn more about being a savvy donor from the BBB Wise Giving Alliance at www. bbb. org/ charity.

Revisit, evaluate and revise the budget along the way. If more is going out than coming in, it’s time to pare down expenses. Consider giving fewer gifts or less expensive ways of entertaining. Last year’s decorations are also probably just fine. When the budget is balanced, make sure to stick to it.

Reward yourself. Allow a small reward if budget goals are met. If they aren’t, the money will be going to pay off a credit card bill in January.

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