On the Today Show yesterday (I was home sick), Jean Chatsky said that you should spend no more than 1 1/2% of your annual salary on the holidays. It was during a conversation about gift buying, so I am assuming that’s on only gifts and not on travel.
Even a percent of your salary seems like a lot of money. Traditional wisdom says to put away 10% of your salary. Many people also tithe another 10%. But if you’ve got kids, I can see the desire to make their Christmas as amazing as wonderful as possible and be able to give them everything that they want. And it depends on what you’re buying as gifts. I know a lot of families who use Christmas as the time to replenish their children’s wardrobes. Kids have this annoying habit of outgrowing their clothes after all.
Still, 1.5% of your salary. That’s a lot of money no matter what you make. I’ve never thought that closely about what I spend on Christmas gifts. Maybe this year, I will look in relation to my total budget and see where I fall. What do you think? Is 1.5% reasonable or does that seem high to you?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.