Keeping the Holidays (and Your Finances) in Balance

In most cultural traditions, the end of the year is a time to honor and celebrate the most meaningful things in our lives -- our spiritual connections with friends, family, and a power greater than ourselves. But everyone knows that the pace of the holidays can be overwhelming. We often seem to focus our activities on "things," rather than loved ones. We are tempted to overspend and often find ourselves facing financial stress for months to come.

Although most holiday spending is over for 2002, now (yes, now) is a great time to think about next year. Take an honest look at your holiday spending. Are you comfortable with the total? What about your debt load? What would you like to do differently next year? Here are some ideas to consider:

1. Use this year's expense list as a planning tool.
   Most of us underestimate what we actually spend at the holidays. With your actual bills and receipts in hand, add up your total holiday expenses for 2002. Then determine what you would like to spend in 2003. Make a budget and plan ways to spread it out. When you reach your spending limit, stick to it. Better yet, create a monthly savings plan to avoid holiday debt in 2003.

2. Make lists and more lists.
   Decide in advance who you are shopping for and what gifts you are seeking. Browse catalogs and look online for gift ideas. Do NOT browse in the stores! Once in the stores, it's easy for countless choices and attractive merchandising to lure us into spontaneous, unbudgeted purchases.

3. Shop early and use credit cards wisely, if at all.
   Shop early to compare prices and avoid hurried, unbudgeted purchases. Pay cash if possible. If you pay with credit, use one low- interest credit card, rather than many cards with varying rates. Here's food for thought: if you can pay for your expenses in one payment, it may be a good idea to use a credit card for ALL of your holiday spending. That way, you will have an accurate, permanently accessible record of your actual spending activities. (Remember, this only makes sense if you can pay off those expenses before interest accrues.)

4. Simplify the gift giving.
   Suggest drawing names for a gift exchange among extended family, co- workers, or a circle of friends. This reduces the spending demand for everyone, and the joint party for the gift exchange is often more fun than the presents themselves. Consider making gifts instead of buying them, or give homemade "coupons" to friends and family members for things you can help them with. For friends with small children, there's nothing more valuable than a free evening of babysitting.

You need to have financial goals, and it's important to pursue a plan to reach them. Still, remind yourself occasionally to be thankful for what you have, right now. We can prepare ourselves the best we can, but we can't really control the future. It is our hope at IRA.com that, among the many gifts of the season, you find moments of peace, gratitude, and joy.