The holidays are not a surprise. Christmas comes every single year. Thanksgiving comes every single year. New Year’s Eve comes every single year. And yet most people walk into November completely unprepared, spend the entire season figuring it out as they go, and start January carrying a credit card balance they are going to spend the next several months trying to pay off. If that cycle sounds familiar, this episode is going to change how you think about the next five months.
One of the biggest reasons people cannot stay out of debt is not a spending problem, it is a planning problem. Your list of bills only accounts for the things you already know are coming, and the holidays never make that list until it is too late to do anything about them. And before you tell yourself you will handle it with your bonus, I want you to sit with this question: what if the bonus is not as big as you expect, or what if it does not come at all? Future money is not a holiday plan, and this episode is about building a real one.
I am walking you through a visual planning exercise I use with clients that puts actual numbers to every part of your holiday season, from the parties you are hosting and attending to family dinners, travel, decorations, and gifts. Once you know what the holidays are actually going to cost you, you can figure out exactly how much you need to save between now and December and start making decisions in advance instead of reacting when November shows up on your calendar.
In this episode you’ll learn…
[00:04:15] Why the holidays are one of the main reasons people cannot stay out of debt and why waiting until November to think about them is already too late to do anything meaningful about it
[00:08:30] The three box and four box planning exercise that helps you map out every part of your holiday season so nothing catches you off guard and you can put a real number to what November through January is actually going to cost you
[00:13:45] How to think through parties, family experiences, travel, and gifts in a way that gets specific enough to actually change what you put in your budget starting this month
[00:18:20] How to figure out whether you are on or off track with your holiday savings right now, what to do if you have a gap, and how to decide in advance which trade-offs you are willing to make so you can say yes where it matters and no where it does not
[00:23:10] Why planning for the holidays in advance actually allows you to spend less and be more thoughtful with your gifts, and how giving yourself more time changes the quality of the decisions you make with your money
[00:27:30] Why budgeting is a skill that gets better every single season you practice it, and how this holiday planning exercise is also building the foundation that keeps you out of debt next year and every year after
Tune in to this episode of Money Files to learn how to plan a debt-free holiday season starting right now so that when December comes you have the money on hand, you are not figuring it out as you go, and you walk into January without a credit card balance hanging over you.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved this episode on planning a debt-free holiday season and finally breaking the cycle of putting Christmas on your credit card, check out Episode 214: Tracking v. Budgeting – How to Actively Manage Your Finances.
Transcript for “The Debt-Free Holiday Planning Method That Starts in July Not November”
Intro: Hi, and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello, and welcome back to another episode of Money Files. So I’m on a debt kick, if you can’t tell. And one of the reasons I’m on a debt kick is because so many of my consults that I’ve had recently have been about paying off debt. And I think debt is one of those things that we think about all the time. And we’re trying to break our debt cycle.
Keina, how do I pay off debt? Keina, how do I pay off debt and stay out of debt? And debt can feel like something that is holding you back from other parts of your life. So one of the secrets to paying off debt is to also learn how to plan ahead. So today’s episode, you might feel like, Keina, why are you talking about this right now? But I’m talking about it because I know that you aren’t thinking about it.
And that is the holidays. So this episode is going to come out in July. We’ll be about five months out, or I guess you could even say four because it’ll be August, September, October, November. So four months out, five if we want to include December. But the holidays are coming. And I use the word holidays because I like to be inclusive of basically November 1st to January 2nd. And I want us to be planning ahead. The reason that you have debt and oftentimes can’t stay out of debt is because you lack the ability to plan ahead. Your list of bills is a document that just has the things that you know to be true that you need to pay, but you’re not actually thinking about what’s coming in the future.
And so today’s episode is really about helping you think about what do I need to be planning for? Christmas comes every single year. Thanksgiving comes every single year. New Year’s Eve, New Year’s Day comes every single year. But yet we go into that season not being prepared. We lack preparation. And that’s not the only thing that happens every single year. But right now is a great time to be thinking about, okay, what do my holidays actually look like? And if you find yourself saying, Keina, I still got time. No, girl, you don’t because you should have started in January. And so now we need to be thinking about what do I want to do if I want to experience a debt-free holiday season? Okay. Debt-free, meaning I have the money on hand and I’m not having to figure it out as it comes along.
And this is even for you. Oh, let me catch you right now because I know some of you are like, Keina, but I get a bonus at Christmas time. I know you get a bonus. And guess what? You spend that bonus 5, 6, 7, 8, 9, 10, 11 times and you are doing fake math to and through. So this episode is most definitely for you. And I don’t want to hear about how you’re using future money to pay for your holidays because even that is dangerous. What if the bonus isn’t as big as you expect, then what? We still need to have a plan because the bonus may not always bonus. The bonus might not always be there. So I want to walk you through this plan. So thinking about the holidays, first I want you to basically prepare and make a list.
I want you to envision what the holiday season looks like. If I were giving you a visual exercise, I would have you draw three boxes. Whether you want to do that horizontally or you want to do that vertically on a sheet of paper. I’m going to give you two ways to think about it. I want you to think about the box as November, December, and then I’m going to put January. And I want you to go back to last year’s calendar and look at what were all the events that you had and write those in the boxes. That’s one way you can think about it. The second way you can think about it, which I think a lot of you will gravitate towards, is I want you to think about what parties am I a guest at or am I hosting?
So if you’re still doing, like a three box exercise here, I actually want you to do four boxes. So what parties am I guest at or what parties am I hosting? So I want you to think Friendsgiving. I want you to think cookie exchanges. I want you to think what galas do you need to go to? What work parties are you going to be participating in? Write that in the first box. So either parties that you’re a guest at or parties that you’re hosting. The next one is I want you to put in family experiences. Even if you are single, I still want you to write family experiences because I want to think about your household and how you like to experience the holidays. So what are you doing in terms of dinner? Are you hosting dinner? Are you adding to the dinner?
What holiday decorations do you usually like to participate in? Maybe you are someone who’s like, oh my goodness, I love to put pumpkins outside the house. Or I know that I want to get a fresh Christmas tree or I want to buy more lights this year. Or I like to decorate inside my home. I want you to think about how are you preparing for those family experiences or adding to it. So just because you’re like, oh, well I always go to my mom’s house. But when you go to your mom’s house, do you bring seven pies from the lady at your job that makes the seven pies? And the seven pies are $30 each and you give her a $50 tip. So you really spend $260. Do you see how that works? So I want you to think about what family experiences am I having during the season? Either how am I adding to them or how am I preparing for them?
The fourth box, I want you to think about travel. Fourth box is travel. So what plane tickets do you need to buy? How many tanks of gas are you going to need to buy? Are you taking trips in between there? Like, are you going to go see friends? So think about your holidays. What travel is involved? Even if you want to tell yourself there is no travel, just make sure that’s actually true. Do you not call driving to Pennsylvania travel? It is travel, even if you don’t want to think about it. Even if you’re like, oh, well, Keina, that’s just a normal tank of gas. It may or may not be, but like write it down. And then the last box I would write is gifts. Who in your family are you going to be exchanging gifts with? Who in your friend circle are you going to be exchanging gifts with? And write their names down. Don’t say, I don’t know, write their names down.
So you either have November, December, January, you have that list. Or you have four boxes with parties that you are either a guest of or you’re hosting. You have your family experiences, you have your travel and you have your gifts. So now you are starting to think about, okay, what do I need to prepare for, for the holidays? I want to give you this visual because I think it’s really important to walk yourself through what your holiday experience is like. You don’t have to get it right, but you thinking about it right now is also going to allow you to take advantage of things that as they lead up to the holiday. As you even look at your guest list that you have, and you know you have your mom and your dad on there, maybe you have your siblings, you have some nieces and nephews.
If you’re preparing this list right now, you are going to be able to think about what do you actually want to gift the people in your life instead of doing it last minute. I don’t know if you know this or not, but thinking about people in advance when you’re gift giving actually allows you to save money because you’re not rushing. When you rush, think about like, you have somebody’s birthday this week and you go to rush to buy them a gift. Generally, you’re trying to think about how big and grand of a gift that you can buy them versus being really thoughtful and being intentional. So you having people’s names written down, you can start listening for what do people want or as you’re shopping out and about in between now and the end of the year, you can be thinking about, oh, I want to pick this up for my mom, but I’m going to save it for the holidays.
So this is going to allow you to even spend less money because you’re giving yourself more time to be more intentional and to be thoughtful. So you have your boxes. And what I want you to think about as you have made your list, you walked yourself through the holidays, is I need us to identify what do I have and what do I need? So we’re basically seeing if we’re on or off track. So you may have, maybe you are one of the people who have already started to plan for the holidays. But as you’re listening to my podcast, you’re like, oh, Keina, I forgot about, I was taking, my friend just invited me on a trip during that time. So I’m going to go see her and her family, or maybe you just had an idea this summer that you want to host a friend’s giving, whatever that is.
So the number that you started with versus what you need right now might be different. So we want to find the gap essentially, and we want to figure out, are you prepared? So are you on or off track? In each of those boxes, I would encourage you to get a number for how much is November going to cost you? How much is December going to cost you? How much is January going to cost you, if you did the months? If you did the four boxes and you’re looking at the parties, how much do you expect to spend on friends giving? Maybe you’re not hosting it, maybe you’re attending it, but you know you’re going to spend $100 to buy ingredients to make macaroni and cheese. Maybe you’re doing a cookie exchange and you’re hosting that at your house. So you want to buy everybody containers.
So you know, okay, that’s going to be, I’m going to go to Hobby Lobby, I’m going to buy $75 worth of cookie containers. I also need to buy some ingredients because I want to do some things. So maybe that’s $175 you need for the cookie exchange. You know you want to go to a gala. You know that gala is $200 or $300. You also know you’re going to get your hair done. You’re going to probably end up buying a dress or renting a dress. And so that’s going to be another $300. Do you hear what I’m doing right now? I’m putting numbers to the things, the experiences that I want to have that are in this holiday bucket. So you’ve gone through the parties, you’re thinking about being a guest or you’re hosting.
You’re also going to think about what does it look like for family dinners in terms of like experiences? Are you decorating? Put a number to these things. Don’t allow yourself to say, I don’t know. That is not an option for this exercise. Even take your best guess. If you don’t know, take your best guess and put numbers to your travel, put numbers to the gifts. This is going to clarify a lot for you. And going through this exercise and you see that, okay, I need $3,000 in order for parties, my family experiences, my travel, and my gifts. Right now, maybe I have $0 saved. If I have $0 saved, I know over the next five months, I need to put away $600 a month for the next five months, starting in August. I’m going to put $500 away.
So now in your budget, you can go and see, do I have space to save $500 for the holidays? Maybe you do, maybe you don’t, but you get to make these decisions in advance. This is how you get to have a debt-free holiday because you are making decisions in advance. If you have $3,000, if you know that the experience is going to cost you $3,000, but maybe in your budget, you’ve only really planned for $1,000 this year, then you know, oh, I need another $2,000. So in the next five months, I need to save an extra $400 a month. And so you’re doing the math of either, am I on track or am I off track? And if you have the extra cash flow, then you’re just going to put this extra money into a savings account so you know it’s for the holidays.
You might also realize that you are more expensive than you believe yourself to be, which can be another realization. Maybe you see this and you’re like, oh, that’s $3,000. I don’t know who has $3,000 because your goals, you might be doing other things. So in that case, this allows you to kind of look at your expenses and say, for the holidays, what do I want to say yes to? Do I still want to go to the gala? Maybe I don’t want to host the Friendsgiving. Maybe I do want to host the Friendsgiving, but I’m not going to host the cookie exchange. Like you’re going to be able to make some decisions and decide your trade-offs before you get to the holidays. Or maybe you were looking at your gifts and you have six people listed and you said you were going to spend $200 on each of those people that you listed.
But maybe instead of $200, your limit is going to be $100. But because you’ve given yourself time, you can also be really thoughtful about what you want to buy. So you’re not just going to be spending money just to spend money. You’re going to be thoughtful about what is coming out of your bank account for the holidays to stay out of debt. You want to have a holiday season that gets cash flowed. So you’ve made that list, gone through the exercise. Now you’re making a plan to see, am I on or am I off track? What do I have? What do I need? And you get to decide in these next five months how you wish to get there. That is all budgeting is. It’s just simply, it’s decision-making. And you get better and better over time in making those decisions in advance.
I tell people that whenever an expense feels like, oh my goodness, that’s like random and it caught me off guard, I tell you to tell yourself, just say thank you. Thank you for the data. That’s all it is. When you look at your bank account and Costco’s charged you again, just say, thank you for the data because it’s telling you where to include that in your plan for next year. So I want you to consider that this right here is helping you shape your plan for next year. You get better and better at budgeting the more you do it. It is a skill. If you listen to my podcast or follow me on social media, you know that I love working out. And building muscle is a skill. Lifting heavier weights is a skill. If I had given up on myself, like when I could bench press, could only do like one rep at a hundred pounds, then I would never get to see myself bench press 135 pounds. Like you have to realize that it is a skill and you show up for it day in and day out, day in and day out.
Sometimes you might have a week where you’re like, oh my goodness, I hate this. And that’s okay. But the thing is that you are invested and because you are invested, you get better with the skill over time. And that is the only thing that is happening with budgeting, is that you get better over time. It doesn’t mean that you don’t mess up. I mess up, but this is another holiday season for you to plan and for you to get better at, for you to learn like, oh, I forgot I did this or, oh, I do this. So you get to identify the numbers and you get to make decisions in advance. Then you can evaluate it when you come out of the holiday season, how well did I do? Oh, I underestimated, I overestimated, whatever that might look like for you.
So thank you so much for tuning in to this week’s episode. If this was helpful, share it with someone else who also needs to plan for the holiday season because holiday is not an emergency expense. So thank you so much for tuning in and I will chat with you next week.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment, and let’s get started.
