I know it seems premature to talk about holiday spending, but if you’re savvy, like we are at Judith Heft & Associates, you need to think about your spending plan now.

Every year, we’re confronted with enticing Black Friday deals earlier and earlier, because retailers want you to start spending as soon as humanly possible. So what we recommend at JHA is, before you get crazy and sucked into all the bargains, create your spending plan for the holidays and don’t get wrapped up in debt.

We recommend basing your spending plan on your annual income. Some people use the rule of thumb that says 1.5% of your family’s annual income can be spent on holiday gift-giving — but your spending should be based on several other factors, too. 

•Manageable Debt: This is debt like car payments, mortgage payments, insurance premiums, etc. If you’re making those, and you’re comfortable making those at this point, great — but keep that in mind as part of your spending plan.

•Unmanageable Debt: This usually manifests as the stuff you’re putting on your credit card and not paying off. Obviously, don’t let the holidays make a challenging financial situation even worse by overspending.

•Emergency Funds: We consider a good emergency fund to be about three to six months worth of expenses. Heaven forbid you lose your job, or get in an accident, or incur unexpected medical costs. Unfortunately, we’ve learned over the last few months that it’s more important than ever to have this emergency fund. It takes time to build it — having three to six months of backup is a big ask. You should make sure the system to fund that is in place before you create your holiday spending plan.

The takeaway is to know how much you want to spend for the holidays, but that doesn’t have to stop you from purchasing or making meaningful gifts. Not everything has to be expensive. You can make over-the-top, medically unsafe desserts, for instance. Creating memories with those you love is more important than how much you spend on gifts.

Bottom line, it’s not that easy to create your spending plan if you don’t know what your daily spend is. This is where we can help! Contact us now to get control and a better understanding of your daily money management. Let us be your personal CFO and organize your finances so that you can start thinking about those holiday gifts!