Let’s face it — the winter holidays are an expensive time of year. No matter what you celebrate, the festivities come with more travel, more food, and more gifts. All that translates into spending more money.
Overspending is an easy thing to do during the holidays if you aren’t careful. But you’re here reading this article — which proves just how careful you are with your money. Keep that good money karma going. Take a peek at these five shrewd financial chores you can do to prevent overspending this season.
1. Build Your Budget
If holiday shopping is a competitive sport, your budget is your strategic game plan. It lets you know how much you can afford to spend without stealing money away from bills or dipping into credit.
Popular financial advice recommends you spend no more than one percent of your annual income on the festivities. Whether you can match that figure depends on your cash on hand. Adjust your spending to reflect your responsibilities, using only expendable cash to buy gifts.
2. Review Your Credit Statements
More than half (53%) of US shoppers plan to put at least some of their shopping on plastic this year. If you’re in the same boat, assign a single card the holidays. This makes it easier to track your expenses and minimizes your exposure.
Given how important your credit is, you should make it a habit to check all your statements all throughout the year. You want to look line by line for any inaccuracies or purchases you didn’t make that could hurt your credit score.
3. Treat Credit Like Cash
Of those 53% of credit card shoppers, 64% of them plan to pay their bill in full before interest accrues. Be like this majority of credit users. This simple decision can save you a lot of fees and it may potentially shelter your credit score.
Why? Your credit card and line of credit balances contribute to your utilization ratio, which is one of the five factors of credit. If you don’t know how your credit score is calculated regarding your utilization, take some time to learn this process before the end of the year.
To protect your credit score and avoid unnecessary interest, treat your credit card like it’s cash. Only spend what you can afford to pay by the due date.
4. Take Advantage of Your Rewards
Most cards these days come with some kind of reward system — whether it’s cashback or redeemable merchandise. After a year of using your credit card, there’s a good chance you have a big balance of rewards points, waiting to be redeemed.
These points are an easy way to stick to your budget this holiday, so don’t forget about them! Take the time to learn about all the perks that come with your account, too. The full package may surprise you.
5. Keep Saving
While it might be tempting to put your savings on hold during the busy month of December, try to keep socking away funds in your emergency fund. You never know when you’ll run into trouble, and you’ll need those savings to afford an urgent repair or medical expense. Saving throughout the holidays means you’ll be better prepared if you get unlucky this season.
Don’t Overspend This Year
These financial chores won’t take much time out of your holidays, but they can have a huge impact on the season as they help you celebrate without going into the red.