If you are like many of us, you might find yourself entering the month of December, starting your Christmas shopping, and running into a problem - budget and cash flow.
One of the things that I like to do is create a separate savings account, and what my wife and I do is decide in advance how much we would like to give to each one of our special family members or special friends with whom we would like to exchange gifts. It could be $25. It could be $50 or it could be $100, but do the thing in advance, where you set the limit and you communicate clearly with your spouse, or you have it set in your mind to know what your limit per person is.
Over the course of the year, what we will do is from our paychecks, put a certain dollar amount into this savings account, and this actually comes across with all of our budget. When we have insurance for our cars, we have car registration, and we have a car maintenance budget. What I do is create a spreadsheet and add up all of these things over the course of the year, and it’s okay that it might take a full year to get a full spreadsheet to know what you want to fill in all of those things. And what that will do is give you a monthly breakdown.
So once you determine what your spending level is for those important people in your family, take that as a total and divide it over 12 months. Say if you have $1,000 as your total Christmas budget, take $83 and some change every month and deposit it into that savings account. And over the course of the year, you will see that adding up, and you'll know that “hey, I have a specific amount to spend, just for Christmas,” and you can avoid racking up those year-end credit card bills.
If you have a varying month-to-month income, maybe you’re in sales, or maybe you are transitioning between careers, always pay yourself first. Have those necessities and that baseline budget in place, but still keep things like long-term savings, your Christmas savings, your car insurance - all of those things as part of your overall underlying budget, then that will help you to manage and pay yourself first, and also include funds for that spirit of giving.