You're Doing It Backwards!

It’s that time of the year! “You know, Santa Claus, and Ho Ho Ho, and presents for pretty girls.” But you’re doing it backwards, I bet.

I’m talking about your Christmas shopping. The season is in full swing and I’m betting that you’re doing something that looks like this:

1. Ask loved ones what they want for Christmas, and receive requests.

2. Go out and buy everything they ask for, and put it all on your credit card.

3. Lose sleep wondering how you’re gonna pay for all that stuff.

4. Pay on the credit card for many months to come, thereby paying waaayyyy more for those gifts than they actually cost, and totally negating, in spades, any savings you may have gotten in Black Friday “deals”.

So, yeah, you’re doing it backwards.

Here’s how to do it the right way:

1. Decide way ahead of time, like a full year, how much you would like to spend on Christmas.

2. Save in your sinking fund on a monthly basis, using your zero-based budget, so that you have saved up that desired amount by the time you’re ready to start Christmas shopping.

3. Write down on a sheet of paper the following information:

a. Total amount of money saved for Christmas, at the top of the page.

b. Names of those people you’re buying for, spread out around the page so you can make a list for each person.

c. Also include a “Miscellaneous” category, for stuff like special new decorations, cards, and foods.

d. Next to each name, and miscellaneous, put a dollar amount, such that the total of all of them adds up to the total amount you have saved (that number at the top of the page).

e. Beneath each name, list the items you plan to buy for that person, with a dollar amount next to each. Just make sure that the total price of all the items for each person does not exceed the total dollar amount you have allotted for that person. This is the point where shopping online to check on prices is very useful. Don’t forget to include tax and shipping costs in the amount for each item.

f. Likewise list the miscellaneous items you want to buy, with a dollar amount next to each.

g. NOW that you have it all planned out, now you can go ahead and start buying.

h. As each item is purchased, check it off the list, and adjust the price you actually paid if necessary. If you spent more on any one item than you originally thought, then you’ll have to reduce the amount you spend on another item. If you don’t want to change how much you spend on each person in total, then you’ll have to make that adjustment on the other items you buy for that person.

Sinking Fund? Zero-based budget? What’s that? What if I haven’t saved all year to buy gifts? What’ll I do now?

1. Do a spending plan (also known as a budget) for your income for December.

a. Add up how much money you will receive from all sources this month and write the total down at the top of the page.

b. Spend that income on paper, down the page, taking care of necessities first, like food, utilities, shelter, and transportation, and required bills, including minimums on debts. Give every dollar an assignment (that's called a zero-based budget).

c. Cut back everywhere you possibly can so that you can find as much extra money as possible to spend on Christmas gifts. But no matter what, you cannot spend more than you make this month!

d. When you have planned where all your December income is to be spent and how much is available for Christmas, then write that number at the top of a new page and start on #3 in the previous list above.

2. Start doing a budget every single month from now on, which includes an amount you set aside in savings for planned large expenditures, like Christmas next year (that’s called a sinking fund).

3. Call me for more help in carrying out the above.

Have a very merry and blessed Christmas!!!