Planning for Everything – Birthdays, Christmas, Vacations, & Home Improvement

When you are living on a budget, extra expenses can feel like a hassle. Christmas, birthdays, taking vacations and household projects may feel more like a burden – you’re obligated to spend money, but there isn’t any room in your monthly budget for these things anymore. Perhaps in the past, you overspent on holidays and gifts and would find yourself in debt afterward. There’s no need to stress over giving gifts, taking vacations, or even doing home improvement projects, and they don’t need to be a financial burden. You can financially plan for these items, just like anything else in your budget.

Let’s talk about how to do that.

Christmas/Birthdays – Giving

At the beginning of the year, we determine how much money we will need for Christmas and birthdays. We review how many people are in our family, and approximately how much we will want to spend on each of them. Let’s say there’s 15 people total in your family, and you are living on a budget, so you are willing and able to spend $25 per person this year. 25*15=$375. You would need to set aside $375 for Christmas money. We have a designated account in our budget (we’ve talked about our personal budget system before) where we save for different things that will come up throughout the year. We set aside money for Christmas, car tags, taxes, etc. in this fund. Over the next month, we would save from our next 4 paychecks for that Christmas fund until we had put $375 in that account.

Projects

If you are a homeowner, you understand that there is always one more home improvement project to do. Whether it is decorations, backyard renovations, bathroom remodeling… There is always something to do in your home. Bankers will encourage you to just take out a line of credit on the equity of your home – use that credit to finance your home renovations, it makes good financial sense. It will increase the value of your home, and it will build your credit up while you renovate. Have I sold you yet? If you are in pursuit of a finance free life, you know that this is just a sales technique. You can just as easily budget for your home improvement projects, and do them over time. Remember, short-term sacrifices for long-term gains. Learn to sacrifice the instant gratification for patience. Simply put, budget for your projects in your monthly expenses. Ours is a simple $75 a paycheck into our house fund – when we want to do a project or buy a decoration for the house, there’s money there for us to do that. No credit lines here!

Vacations 

When it comes to vacations, the process is the same as everything else… Plan for it, and save! At the beginning of the year, plan out your vacations. Then, just like the Christmas fund, save accordingly.  In our house, we don’t plan anything lavish, outside of our means, because we can’t afford it. Most of our vacations are nearby and don’t cost us more than $2,000 a trip. Within our budget system, we have a specific account titled “vacations”, and every month, part of our savings goes towards this fund. We plan at the beginning of the year because our travel typically happens over the summer. Plan out your vacations as early as you need to, so that you have at least 6 months to save. Anything less than that, you’ll run the risk of using debt to pay for them. If you plan a $2,000 vacation 6 months in advance, you’ll need to save $334 a month, or $167 per paycheck. See the importance of planning in advance?

All in all, these extras don’t really need to be extras. You can easily plan for them, you just need to evaluate your priorities in your budget. You need to make a place for them in your monthly spending and make a change in your mindset. Don’t let yourself be tricked by salespeople. Live a life without financing – focus on planning for your expenses in advance. It will change the trajectory of your financial future.