Keeping Finances in Check During the Holidays

A conversation with financial expert Rachel Cruze

Sales can be tempting but if you don't have the money, don't make the purchase. Photo by Hudson/Topical Press Agency/Getty Images

The expectations are high. The Christmas carols are everywhere. The marketing messages are relentless. It takes a strong will and a solid frame of mind to navigate the holiday season with your financial integrity intact.

I asked Rachel Cruze for her advice on keeping finances in check during the holidays. She is a best-selling author and the host of The Rachel Cruze Show and The Rachel Cruze Show podcast. Here’s what she said.

The Epoch Times: Why do you think staying on solid financial footing is especially difficult during the holidays?

Rachel Cruze. Courtesy of Rachel Cruze

Rachel Cruze: It’s the happiest time of the year, which means we’re seeing everyone “living their best life” on social media. It’s easy to fall into the comparison trap. Trust me, we all struggle with it!

But comparison will steal your joy and your paycheck. If we’re not careful with social media, we can wind up chasing someone else’s values instead of our own, and it always dead-ends in debt. If social media is tempting you to spend more money than you have, set some boundaries.

Set a time limit for the amount of time you can spend on the apps. Or maybe commit to taking a break from social media altogether and focus on making memories with the people right in front of you. The most important thing to remember is that you’re comparing someone else’s highlight reel to your real life.

The Epoch Times: What are the most common money mistakes you see people making this time of year?

Ms. Cruze: One of the most common money mistakes I see around the holidays is not making a budget. Without a budget, it’s easy to spend a little money here and a little there. Before you know it, you’ve spent hundreds of dollars and haven’t even bought a present for your husband yet!

Don’t do that to yourself. You know Christmas is coming. Make a list of everyone you need to buy for and add a line item to your budget. Assign a dollar amount to each person and stick to it.

Another mistake I see people making is shopping for themselves. As tempting as it is to buy a little something for yourself in the middle of all this Christmas shopping, remember that the holiday season is about giving. It’s not about you! If you really want it, add it to your Christmas wish list and share it with a loved one who might want to buy it for you.

The Epoch Times: What are the key strategies you recommend to ensure good financial health in the new year?

Ms. Cruze: I said it once, but I’ll say it again. The first, most important step to financial health is a budget. If you don’t tell your money where to go, you’ll wonder where it went. Your income is your biggest wealth-building tool, and a budget is what will set you up to win with your money. It might not sound like much fun, but doesn’t a vacation with your friends and coming home without debt sound fun?

I recommend creating a monthly, zero-based budget. This is where your income minus your expenses equal zero. I want you to spend every dollar on paper, on purpose, before the month begins. So every dollar has a name. I use the free budgeting app EveryDollar because it helps me to stay on track!

The other key to taking control of your money is getting out of debt. Aren’t you sick and tired of your paycheck already being accounted for before it comes in? If you want to win with your money, you have to make the decision to kick debt to the curb!

If you have debt, start by building a $1,000 starter emergency fund. Once you have that, list your debts smallest to largest, regardless of interest rate, and attack the smallest debt. Throw everything you can at that debt. Then, when you’ve paid off that debt, roll that money over to the next largest debt. This is called the debt snowball, and we’ve seen people pay off debt in an average of 18–24 months using this method. Trust me, it works, and you’ll experience so much freedom when you’re no longer shackled by debt!

The Epoch Times: What are some of your favorite ways to save money during the holidays?

Ms. Cruze: One simple way to save money during the holidays is to learn how to say no. There are so many parties and festive activities this time of year. And a lot of them cost money!

Don’t feel pressured to say yes to attending a party or taking your kids to the most expensive Christmas show. Choose to attend the things that you can actually afford so that you’re not paying for Christmas in January. The great news is that there are also a ton of free activities this time of year to enjoy, too!

Another way to save money is to be careful with sales. Just because something is on sale, doesn’t mean you have to buy it. Should you look for deals? Absolutely. But you shouldn’t stretch your budget or spend money you don’t have just because something is “on sale.” Use sales to your advantage, but don’t let Christmas sales turn into an excuse to use credit cards.

The Epoch Times: How would you encourage someone working to get out of debt, but wishing for a “magical” holiday season?

Ms. Cruze: Getting out of debt is hard work. The reality is that there may be things you have to say no to right now. You’re making short-term sacrifices that are setting you up for long-term financial freedom!

But being on a budget doesn’t mean you can’t have any fun. Find ways to get creative this holiday season so that you still feel like you have a life. There are so many free or low-budget holiday activities that you can enjoy. You can watch Christmas movies at home, drive around a festive neighborhood and look at Christmas lights, or even serve as a family. Remember what the holidays are all about. What matters most is spending time and making memories with the people you love. You can’t put a price on that!