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Make This Year Different: Stick to Your Holiday Budget

Overspending during the holidays can throw your financial world into a tailspin. To avoid the holiday spending trap, it’s important to understand what’s really driving purchases and to develop a plan to keep you on track.
Why We Spend:
Many of us try to compensate for not spending time with our loved ones by buying elaborate gifts. We also put pressure on ourselves: “I’m the person who has to send out 500 Christmas cards.” “I’m the guy who has to give my wife expensive jewelry.” These perceptions play out in your financial choices.
Stay Connected to Your Goals:
Goals provide us with the motivation to stick to financial plans, but they need to be specific. “I want to save $5,000 towards a down payment on a house this year.” “I want to put $1,000 in my child’s college fund.” Figure out what you want to achieve and figure out what it costs.
Get into the habit of asking yourself three questions before you spend:
Can I afford this?
Is this spending in line with my goals?
If not, why am I doing it?
Budgeting Tips:
Figure out what you can afford to spend before you hit the stores
Don’t take money from your emergency savings
Don’t spend more than you can pay back in one month
Prepaid cards, like the American Express Prepaid Card, are a great way to stick to your holiday budget. You can load a set amount and not worry about overspending. This card is also great because there are no monthly maintenance or activation fees.
Use The Holidays To Teach Financial Family Lessons:
The holidays are a perfect time to instill financial lessons in your own family by leading from example. Come up with three things you want to teach your children about the holidays and walk the walk in your own life. For example:
The holidays are not about money! Perhaps you and your family can come up with unique gift ideas like offering to babysit for a relative.
The holidays should not stress your financial life! Show them this by putting a set amount on a prepaid card and using that for all of your shopping to stay in budget and not overspend. Since prepaid cards are great for every day spending as well, this lesson can continue.
The holidays are about giving: You and your child can identify a charity to give to or donate a gift to needy children.
Awareness of what’s really driving your spending and a plan of action can help make this the year that you stick to your holiday budget.

Stacey Tisdale is a personal finance expert and author of “The True Cost of Happiness: The Real Story Behind Managing Your Money.” (Publisher: John Wiley & Sons)  Tisdale is the financial correspondent for PBS national newsmagazine show “Need to Know” and is also a blogger on the Huffington Post – Black Voices platform. She is currently working with American Express on the Prepaid Card.