How to Get Through the Holidays Without Going into Debt
The holiday season can be a wallet-emptying time of year. From buying gifts to putting elaborate meals on the table, there will be many opportunities to put a serious dent in your checking account and to amass some fresh debt. But avoiding debt doesn’t mean skipping out on certain traditions entirely. Instead, spend some time in the next few weeks creating a budget. When paired with a bit of discipline, a carefully crafted spending plan can help ensure that you enjoy the holiday season without going overboard.
Set a Spending Limit
Your first course of action should be setting a spending limit. To do so, take a look at your checking account and calculate how much money you’ll need for monthly expenses like rent and groceries. Those funds should be off limits, and ought to give you a better idea of how much cash you can allocate toward nonessential purchases, like gifts, travel and entertainment.
Whatever number you come up with, your spending limit should be set in stone so that you don’t begin making exceptions when you’re out buying gifts or making travel arrangements.
Open a New Savings Account
To help keep you honest, open a new savings account at a financial institution like Strait View Credit Union. Transfer your holiday spending money to this account and use only that cash when doing your shopping. That way, you can make sure you’re not tapping into funds that are meant to be left untouched, like long-term savings or money for your utility bills.
The Bottom Line
Serious debt isn’t as easy to shed as those two or three pounds you might gain over the holidays, and that can really hurt your credit score. It’s especially important for young people to avoid fresh debt, as millennials have the lowest average credit score among all age groups, according to NerdWallet’s research on average credit scores.
Setting a budget — and sticking to it — will help ensure that you enter the new year in good financial shape.