Christmas is over a month away, but it’s never too early to start preparing your finances for the holiday season. Without a plan, it can be easy to fall into unhealthy consumer habits, so set aside time this week to create ground rules for your spending. Here are a few suggestions.


Don’t tap into your savings

The meaning of this is two-fold. First, if you have an emergency fund, college fund, new car fund, etc., don’t use any of that to pay for the holidays. It can be a slippery slope: once you start dipping into your savings, doing it again and again becomes easier.

Secondly, if you have an automatic savings plan, don’t cancel it to use the money for gifts and other holiday-related purchases. Instead, find ways to cut expenses to save extra money.


Let your finances dictate your budget

A simple way to create a budget is to list all the gifts, decorations, and other holiday items you need, and assign a dollar amount to each. However, budgeting this way doesn’t reflect your personal finances. Even if you stay within this budget, you can end up spending more than you can afford.

A better way to budget: determine how much money you have available for Christmas, then decide how much to assign to each item on your list.


Avoid debt

A generous heart is a blessing to others, but you don’t need to buy something for everyone you know, and you certainly don’t have to buy expensive gifts. (In fact, you don’t need to buy anything – a handmade gift or providing a service can be just as good). Know your spending limits this holiday season and avoid racking up debt.

That said, there’s nothing wrong with using your credit card. In fact, using a credit card to take advantage of its rewards program can help you save. But be careful: a credit card can be a gateway to more spending. Also make sure you pay your card’s balance before you are charged interest.


Know what you want to buy beforehand

Once you have your budget, create a list of things to buy for each person so you can scour store ads and the internet for the best prices before hitting the stores. If you go shopping without a list, you’re more likely to make expensive impulse buys and less likely to get the best deals on your purchases.


Budget for next year

Christmas may come at the end of the year, but that doesn’t mean you can’t start planning for it in January. After the holiday season is over, review your costs and build that cost into your 2014 budget. You’ll find it much easier to save a little money every month instead of trying to scrounge up a large sum of cash in November and December.


Covenant Trust Company is a financial services company owned by the Evangelical Covenant Church and its affiliates. Our services are available to anyone in need of asset management, retirement planning, legacy planning, gift planning, or trust services. In addition, we seek opportunities to encourage and promote healthy financial habits, and keep a personal finance blog at


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