How to do Financial Planning for Christmas

Christmas is the most special time of the year. It is a time when everyone wants to give from his or her heart just to make their loved ones smile. However, giving from the heart at Christmas time requires a bit of financial planning. An individual must follow a certain process in order to buy the things that friends and family members need and want. Financial planning requires a pen, paper, and a practical mind. The following are steps for how to financially plan for Christmas:

1. Get out Pen and Paper

The first thing to do when making a financial plan is to take out an old-fashioned pen and paper. This may seem like a primitive method compared to computer programs. However, financial planning is very effective when using the most basic items to keep track. A plain pen and paper will make the financial outline more visible and easy to work with.

Shoppers should begin financially planning for Christmas as early as possible. One should avoid waiting until the last minute if possible. The earlier the individual can develop a plan, the smoother the process will go.

2. Calculate Available Funds

The next step in the process is calculating available funds. The individual can calculate his or her available income by subtracting monthly bill payments and essentials (food, clothing, household items, etc.) from total income for the month. The figure will give the person an idea of how much he or she has available to spend on things that are not necessities.

3. Decide on a Figure

After the prospective shopper calculates available funds, he or she should make a decision on how much of that bulk figure should be used for Christmas shopping. Since the funds are free for use, the set amount is left to the discretion of the consumer. He or she could use the entire amount, fifty percent, or an even smaller amount. It is best to only use half of the funds and not go overboard. That way the consumer will have cash left for emergencies and savings.

4. Create a List of Names

Creating a list of names is one of the most crucial steps in the process of holiday financial planning. The consumer must think of everyone that he or she plans to purchase for. Family members, friends, associates, employers, and neighbors should be included in this list. The individual should include even people who will only be receiving cards or something small. This part of the process may take a long time because it has to be thorough. There should not be any last minute mistakes or forgotten gifts when Christmas rolls around.

5. Divide and Allot

This part of the financial planning may be tricky. The consumer must take the total available funds set forth in step 3 and divide them by the number of people on the list in step 4. This will give the person an allotted amount to spend on each person. For example, imagine that a consumer has $500 of available Christmas funds and there are twenty people on the gift list. The allotment amount for each person would be $25.

Next, the consumer can make changes to the allotment amounts in order of importance. For example if he or she has one child and three acquaintances on the list, some of the allotment for the acquaintances can be shifted to the child’s allotment. Allotting is the tricky part of the planning process and it will take some mathematics and deep thought.

6. Get Ready to Buy

Once the person develops the Christmas list and present buying allotments, the rest is very easy. The amounts the person will spend is carefully written on the paper. The next step will be choosing presents that fall into the appropriate price range for each person. The six previously mentioned steps are the basis of financial planning for Christmas time.