Jump on the Savings Sleigh

Finding ways to cut back and increase cash flow for the holidays.

The winter holidays are, without exception the most expensive shopping season of the year for most Americans. It’s also the time when families are most likely to take on too much credit card debt. But with average balances over $7,000 already, can America really afford to go overboard for the holidays this year?

Graphic displaying tips for saving money and increasing income for the holidays

Why cash flow is key at the holidays

The reason you want to increase free cash flow in your budget as much as possible is so you can avoid taking on holiday debt. With so many out-of-budget expenses during the holiday season, it’s easy to run out of cash and turn to your high-interest credit cards to get you through the season.

And people often do the same thing every year – you spend until you run out of cash, then switch to credit so you can keep spending in order to make the holidays perfect for everyone. You make a conscious decision to ignore your debt until after the holidays, then you feel the floor drop out when you finally get around to checking your balances in January. And since credit cards have such high interest rates, you spend most of the year paying off last year’s holiday debt until you repeat the cycle all over again.

More cash flow breaks that cycle. You can pay for purchases in cash, rather than turning to high interest credit cards. This helps you save money, because you’re not adding finance charges to your holiday purchases.

Close spending leaks and cut expenses in your budget

Aside from getting an extra job or selling some of your stuff, the easiest way to improve cash flow is to close spending leaks in your budget. In most cases this involves one of two things – either you close spending leaks in your budget or you cut discretionary expenses temporarily during the holiday shopping season.

Spending leaks. A spending leak is where you’re spending more money than you have set in your budget or more than you should be for a particular expense. For instance, maybe your food budget is set at $100 per week, but you see you’re actually spending $180. You look at your monthly transactions and see you’re going out to lunch with coworkers and spending too much every weekday afternoon. Take your lunch every day – or even just a few days – and you’ve closed that spending leak a bit.

Discretionary expenses. These are all of the nice-to-have expenses in your budget. Trips to the salon, entertainment, subscriptions, paid accounts, memberships, tithes – it’s everything you like to do in a given month, but don’t absolutely need to live and work effectively. During the holidays, cut some discretionary expenses. Consider that you don’t need a hefty entertainment budget if you’ll be spending more time with the family. See if you can suspend streaming media accounts or cancel a few that overlap. Remember, you can always introduce discretionary expenses back in once you’ve gotten through the holidays successfully.

Use this infographic

<a href="https://www.consolidatedcredit.org/infographics/jump-on-the-savings-sleigh/" target="_blank"><img src="https://www.consolidatedcredit.org/wp-content/uploads/2017/04/jump-on-the-savings-sleigh.png" alt="Graphic displaying tips for saving money and increasing income for the holidays" class="img-responsive" /></a>