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The Best Interest » Predicting the Future with Startling Accuracy

Predicting the Future with Startling Accuracy

Christmas is coming. I know it, you know it, the stock clerks at Target certainly know it. While some people are currently celebrating Christmas in July with sunshine and sandals on, my mind is on Christmas for slightly different reasons. How do I afford Christmas? What if I can’t afford Christmas?

Christmas is the ideal example of a foreseeable expense. Maybe you know the exact date of the expense (November/December, every year), or maybe not—like your next oil change or medical check-up. But these expenses are guaranteed to happen eventually. So why not plan for them ahead of time?

Let’s start with this Christmas example. There are a couple common methods when it comes to financial planning for the holidays.

Christmas in July. Budget. Santa.

Method #1:

  • Check the bank account around November 10th. Ignore this number. Begin life anew in an alternate financial reality.
  • On the Friday after Turkey Day, buy things at malls (attn. youth: this is a mall).
  • On the following Monday, donate to the Jeff Bezos Fund for World Domination.
  • Around mid-December, check bank account again. Cuss quietly.
    • Click refresh. Click refresh again. Why isn’t alternate reality working?!
      • Cuss loudly.
  • Merry Christmas? Time to start looking for some extra spending money.

Method #2:

  • Set aside money every month, January through November. Or July through November. Just plan ahead.
  • Check the bank account around November 10th. Or don’t. Because you already know how much money you’ve set aside.
  • Spend money—malls, Amazon, where ever—with the knowledge that you’re not robbing Peter to pay Jeff.
    • Or don’t spend money. I don’t mind being that cynic who reminds you that culture and tradition are not equivalent to spending money on material kitsch.
  • Around mid-December, check the bank account. Or don’t. You’re tracking your spending, so you already know how much money is there.
    • Go back to celebrating the holidays like it ain’t no thang.
  • Merry Christmas!

Pop quiz! Which of the two methods is preferable?

If you answered Method #1

If you answered Method #2, that’s awesome!

I ran some Google data to see when people start searching for “Christmas Budget” and other related searches. Guess what?

In each of the past 5 years, searching for “Christmas budget” begins around late October, spikes in early December, and then dies out in early January. I think it’s awesome that the internet provides answers to questions about Christmas budgets, but one month of lead time might not be enough.

The great part of foreseeable expenses is the “foreseeable” part. You can see them coming! You can plan for them. You can anticipate them. It’s like the other team is telling you exactly what play they’re going to run. It makes the game simple. Just take the knowledge of future events, and plan accordingly.

In my budget, I plan for the following foreseeable expenses:

  • Home maintenance + interior design
  • Normal medical + dental expenses
  • Gifts (including Christmas)
  • Clothing
  • Auto maintenance

I know I’ll need clothes or an fluoride treatment eventually. It might only be once or twice a year. But I can foresee it! So why not set aside the money now? And this doesn’t include the slack in my emergency fund, as discussed last week.

I know it’s July. I know that Christmas is still five months away. But you already have a sneaky little number in your head—how much money you think you’ll spend for Christmas 2019. You can predict the future too! So why not prepare for it today?

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