Be realistic about holiday expenses

When I was a kid, Christmas club savings accounts were quite common. Like their close cousin, the layaway plan, these accounts encouraged people to start saving far in advance for expenses they knew were coming.

In these tough economic times, a return to savings methods that worked so well for our parents might not be a bad idea. The basic fundamentals they understood included knowing what things really cost (including taxes and finance charges), prioritizing your expenses, and being willing to postpone or forgo purchases that will upset your overall budget.

The holidays are the most challenging time of year to curtail spending, thanks to long gift lists, frantic last-minute shopping and higher-than-usual travel and entertainment expenses. Here are a few tips that can help you rein in holiday spending:

Add up expected holiday-related expenses including gifts (for family, friends and coworkers), decorations, new clothes and accessories, gift-wrapping paper, cards, special meals and year-end gratuities. Don't forget travel-related expenses if you plan to leave town, and try to recall unanticipated expenses from last year that might recur.

The flipside – and more important aspect – of holiday budgeting is to calculate how much you can actually afford to spend. If you are deeply in debt, having trouble paying regular monthly expenses, worried about being laid off or haven't saved an emergency fund, this isn't the time to rack up additional debt.

So, revisit your list and look for items to trim. A few thoughts:

• Arrange gift lotteries with family members and close friends so each of you can concentrate your time, effort and money on getting fewer, nicer gifts.
• Speak candidly with friends, coworkers and extended family about placing a moratorium on exchanging gifts. They're probably feeling the pinch too.
• If the gift-giving gesture is important to you, suggest pooling your resources with others to make a sizeable contribution to a charitable cause you all believe in.
• If you're traveling just to get away, consider a "staycation" this year.

Give the gift of time. Older relatives and friends don't need another box of chocolates, but they could probably use your help with household chores, running errands or taking them to doctor's appointments. Plus, they would probably appreciate your company. For harried young parents, offer to babysit so they can run a few errands or simply recharge their batteries.

If you need to scale back on purchases, try making some gifts and get your children involved. Whether you're creating homemade cards or baking cookies for the neighbors, they'll appreciate being able to spend more time together. Plus, you can use it as an opportunity to discuss the need for better budget management – and why gifts from the heart are so important.

If you need help creating a holiday budget, visit Visa's free personal financial management program, Practical Money Skills for Life, (www.practicalmoneyskills.com/holiday) where you'll find easy-to-follow budgeting, holiday entertaining and travel planning tips as well as interactive calculators to track your spending.

Take a page from your parents' book: There are plenty of ways to enjoy the holidays without breaking the bank.