Tricounty News

Budgeting for the holidays: Smart spending for the season

The countdown to the holiday season has officially begun with decorations on store shelves and gift catalogs filling mailboxes. A recent study by the Consumer Electronics Association shows that individual consumers plan to spend $1,634 overall this holiday, up 11 percent from last year. Unfortunately, much of that spending will be done on credit cards. That may make consumers feel gloomy when they get their bills in January.

"Smarter money management" is a common New Year's resolution for many people. So why not get a jump on things now and budget and spend wisely this holiday season? People often go off the financial rails when the holidays roll around, says the Minnesota Society of Certified Public Accountants (MNCPA). Developing a spending plan and sticking to it can help keep you on track and keep you from drowning in post-holiday debt.

Tips for holiday financial happiness

• Create a spending plan. What can you realistically afford to spend? Decide whom you will buy gifts for this year and how much you will spend on each person. Then stick to your plan.

• Categorize your spending plan. Your holiday spending plan shouldn't just include gifts. Don't forget to account for all of the "accessories" that accompany the holiday gifts, like wrapping paper, bows and tape. Doing some entertaining this year? Then be sure to budget for party clothes, decorating, food and beverages. Traveling to see family? Airfares, gasoline, hotels and meals should all be included in your holiday budget plan. Don't forget a category for any charitable giving you usually do as well. Holiday cards and postage are also often overlooked as part of the budgeting process.

• Avoid impulse buys. Try to do some research about when and where to buy the gifts on your list at the best price. Store flyers and door-buster sales can offer big savings if you're willing to do the legwork to find the deals. "Cyber Monday," the first Monday following Thanksgiving, is a big day for Internet specials. Plan to start your shopping early so you don't feel pressured to grab something at the last minute that will ultimately blow your budget.

• Keep track of spending. Little items here and there can tip your holiday budget out of the black and into the red. Keep track as you buy to ensure you always know how much you have left to spend. And definitely keep those receipts in case a gift recipient needs to make a return or exchange. If you find yourself going over your limit, figure out where you can cut back to make up the difference.

• Think outside the gift-wrapped box. Talk to your loved ones about establishing traditions in which the focus is on spending time together, not spending money.

• Make gifts for each other

• Attend a cultural event

• Volunteer together

• Draw names for a gift exchange instead of buying gifts for everyone

• Pool funds and make a donation to a charity you all support

• Plan a cookie exchange

• Host a potluck dinner instead of an expensive sit-down meal

• Plan how you'll pay. Ideally, create your budget and stick to it. Pay with cash or a debit card. Average purchases using cash/debit cards are about 15 percent less than credit card purchases. But if you're like many people who want to stack up air miles or points on your credit card, be sure you can pay off the bill when it arrives in January. Pay on time and in full to avoid finance charges, late fees and exorbitant interest rates.

• Use holiday budgeting as a teachable moment for your children. Include the children in the planning so they learn to prioritize expenditures, evaluate options rationally and have buy-in on major purchases and charitable-giving selections.

Smart planning for happy holidays

Don't let overspending take the cheer out of your holidays, says the Minnesota Society of Certified Public Accountants (MNCPA). Creating a spending plan and sticking to it can help you start and end the holidays on a happy note. That way, you'll start the new year feeling confident and in control of your finances.

Your certified public accountant (CPA) can help

Planning for the holidays can be stressful, especially when it comes to money matters. A year-end meeting with your CPA can help you end the year in the best financial position possible and enter the new one feeling as fiscally secure as you can. Don't have a CPA? Visit to locate one in your area. You can also visit the MNCPA website at, for great personal financial planning advice and tips.

Additional resources:

Center for Responsible Lending:

Consumer Reports:

Columnist Michelle Singletary of the Washington Post - Personal finance advice on real-life issues:

Charity Navigator:

The Minnesota Society of Certified Public Accountants (MNCPA) serves the public interest by advancing the highest standards of ethics and practice within the CPA profession. MNCPA delivers on that promise by offering extensive continuing professional education and resources; advocating for members and the public with regulatory agencies and boards; and mentoring and encouraging the CPAs and business leaders of tomorrow. Founded in 1904, MNCPA has 9,400 members who work in public accounting, business and industry, government and education.