At this time of year, many people overindulge, whether it's overeating or drinking too much at holiday parties or spending too much on gifts and decorations. You'll regret the former the next morning; but with overspending you may not feel the hangover effect until the bills come due in January.
Here are a few tips for managing holiday expenses to avoid a holiday spending hangover:
Before spending a dime on holiday expenses, calculate how much you can afford relative to your overall budget. Many financial planners recommend spending no more than 1.5 percent of annual income on holiday expenses. Consider:
Will your savings cover a few months' expenses in case of a layoff, unexpected medical bills or another financial emergency?
Can you pay off all holiday-related bills within a couple of months?
Do you already struggle to pay your monthly bills?
Would you need to suspend retirement savings to buy gifts?