Plan Ahead for the Holiday Budget Crunch

Every year, millions of Americans celebrate the holidays with traditions like throwing parties and buying gifts for family and friends. Unfortunately, many also participate in another tradition that lands them in debt – spending more than they can afford.


This year, break the buy-now, worry-later habit by creating — and sticking to — a special holiday spending plan. It won’t take long, and you’ll still be able to spread cheer without completely draining your wallet.


Set Limits and Goals
Gauge how much time you have between now and the holidays and determine a realistic spending limit. Divide that amount by the number of weeks you have available and try to save that amount each week.


Next, figure out how to achieve this weekly savings goal. Can you eliminate a weekly dinner out? Take public transportation instead of paying for gasoline and parking? Once you find the money, set it aside in a bank savings account or in something as simple as a coffee can or envelope.


Once you understand how much you can realistically afford to save and spend, try to stay within your limits. The following pointers may help — now and in the long term:


  • Resist the urge to borrow from your employer-sponsored retirement account. The less money you have in your account today, the less money it may be able to generate for the future. And if you leave your job before the loan is paid, you must repay it in full or face taxes and a 10% penalty.
  • If you have a big family, think about proposing a system in which each adult buys just one present for one other family member. Drawing names from a hat should do the trick — and let everyone save money at the same time.
  • If you won’t see certain people until after the holidays, wait for the post holiday sales to do your shopping. Prices can be much lower.
  • Keep your receipts for everything from greeting cards and gifts to decorations and holiday meals. In January, sit down and figure out how much you actually spent. This will help you set a goal for next season. Divide your goal by 12 and try to set aside that much cash each month over the next year.


We encourage you to avoid a holiday tradition that can undermine their long-term financial security — spending more than you can afford. Nobody ever said you need to be a tightwad to enjoy the holidays, but spending carefully may be the best way to guarantee happy memories of debt-free celebrations.


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Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail


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