What do Christmas trees have to do with budgeting? If you’re one of the farmers who grow and sell them, the answer is—a lot. The business holds valuable lessons for anyone who wants to make a set amount of money last a long time.
Some products, such as milk and paper towels, are bought year-round. The companies that sell them count on a consistent stream of income. But other products, such as pumpkins, are usually bought once a year. If your job is to sell pumpkins, most of your revenue comes in around Halloween.
Some businesses earn most, if not all, of their income over a few months. Beach hotels make most of their money when it’s warm and families are on vacation. Ski resorts earn their income when there’s snow.
So what happens when you do most of your business over a few months but need to make your money last all year? It’s a challenge, says Jane Waterman, a co-owner of Uptown Christmas Trees. Her business sells trees at 19 locations in New York City. Most of the trees are grown on farms in Vermont.
Waterman and her family have been in business for 45 years. She says it’s difficult to figure out how to make their money last. “We do the best we can,” she says. “We are scraping by more at the end of the year than at the beginning. You think you have a lot of money when you’re working, but you actually don’t.”
It’s a problem you can relate to if you’ve ever had a summer job. You make money in June and July, but you still need spending money after the summer is over. So what do you do? You learn to make a budget.
Building a Budget
A budget is a spending plan. It’s a method for taking the money you have coming in and stretching it until your next paycheck. Ideally, you can pay for everything you need, plus a few things you want. Equally important, you can also save. That’s hard enough to do when you get paid regularly. But when you only get paid a few times a year, it’s even more difficult.
Waterman and others who are paid seasonally solve this problem using math. They take the total amount of money they earn during their busy season (after taxes) and divide it by 12, the number of months in a year. Then they line up that number with their monthly expenses, allow for a little fun (when you also budget for fun stuff, it’s easier to stick with your plan, Waterman says), and put money into savings for emergencies.
Emergency funds are important, especially for seasonal workers. Christmas-tree sellers, Waterman says, can always have a bad season due to lousy weather or a shortage of trees. And if there’s still not enough money to get you through the year? You can get a job during the off-season. Many tree sellers who work for Waterman also work as musicians or landscape architects.
Here’s the bottom line: When you have your first job, you might get a regular paycheck. Or you might be paid for a few months of work. But it’s never too soon to apply the budgeting skills used by people in seasonal businesses. Happy holidays!
—By Rebecca Cohen
Extra! Click here to read a related article from TIME for Kids.