Happy New Year! I hope your holidays were fantastic.
My friend called on December 21st and asked me if I would consider writing a blog to help people get on a financial plan for the year 2011 and onwards.
That seems like a tall order, so I asked my friend what made her decide to ask me to blog about preparing a financial plan.
Here are her answers:
- I was just not prepared for the holidays as I should.
- I believe there must be a better way to get prepared for the holidays.
- I have no idea where to begin planning for big occasions such as the holidays or wedding.
- I end up without any money for myself for entertainment during that time.
- How can I avoid making costly New Year resolutions?
- I end up using money from my household expenses to pay for gifts during the holidays.
- In January, I am very unhappy and lost when looking at my big credit card bills.
- During the months of January and February I need to borrow just to make ends meet.
- For the first four months of the year I go from pay cheque to pay cheque.
- How can I stick to my gift list?
We all know that the Holidays are in December and the dates are pretty much the same, so why are so many of us not ready for the holidays? Why is it that we seem to be so surprised when it’s that time of year again? My favourite quote is, “I can’t believe it is already December.” Well, it does follow November and it’s the same every year.
Getting prepared for the holidays should start at the beginning of the New Year, using the information you have from the end of the previous year.
Here’s what I mean:
- You have all your receipts from all your purchases.
- You have a list of the people to whom you gave gifts.
- You also should have a list to your donation to the various charities you donate too at this time.
- You should also remember to add up the extra money you spent on groceries or alcohol ( it is not every month you purchase a turkey or that special liqueur)
- Remember the cost for the new party dress and shoes for the holidays.
So, the very best time to begin preparing for the holidays is actually in early January.
Take your time and add up all those bills. Be careful and go over them again and again. Take a break when pulling your numbers together. You might forget something so by taking a break you will give yourself some time to really get it right.
Once you are sure you have the exact amount you spent, or you are pretty close, add 10% to 15% more to make up for price increases and your new people on your list. Personally I add 20%.
Here is an example of what I mean:
- Suppose your total expanses total $1,546.72 and add 15% = $232.01, then add that to $1,546.72 = $1,778.73. So now you know that you need to save this much for the holidays.
- This number $1,778.73 should be divided by the pay periods you have in one calendar year.
- Most people are paid bi-weekly or they have 26 pay periods in one year.
- Divided $1,778.73 divided by 26 = $64.41 every pay-day. You can do the same if you are paid weekly, semi-monthly or monthly.
- Visit your financial institution and open a savings account. These accounts allow you one or two free transactions a month. Anything over that will cost you $5.00 or more.
- Make a list of each person you plan to buy a gift for and decided the amount you plan to spend on each person next to their name. Stay focused and do not go over. If you spend less that’s much better.
- Carry the list with you always.
- Take advantage of sale opportunities. You can start purchasing early if you have your list and money in your account to do so.
- In December when you are ready to shop, you should transfer the money into your checking account and begin your shopping.
- Please keep track of your totals and stick to your list because if you stray you will be in a mess.
This is the very first thing you should do to have a better financial experience in December 2011.
New Year New Financial Rules!
I will follow with a series of blogs to help you stay on track and address the other points.
Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com