Can you believe it is already December? ‘Tis the season to spread love and joy…without overspending! So often I see families doing great throughout the year with their budget and then the holiday gifts, celebrations and travel take a toll on the finances. Ideally, you would have a savings goal throughout the year to fund holiday expenses, but if not, here are a few tips to keep you on track.
- Have a plan – Like the old adage says, “Failing to plan, is planning to fail.” I don’t know anyone that stays on track with holiday spending without a game plan. Make a list of everyone that you need to buy a gift for and assign a dollar value, no matter how small. Make sure that you factor in extras like gift wrapping and shipping. Once you have a plan, stick to it. Don’t let impulse buying or the “perfect gift” put you over budget.
- Scale back – If you have a large family, consider drawing names so that you are able to buy one special gift for someone, rather than trying to buy for everyone. Set a spending limit that takes into account everyone’s financial circumstances.
- Shop online – If the overcrowding stores put you in a rush, to the point you will make an impulse purchase just to get out, consider shopping online. If you love the holiday bustle, use online shopping to compare prices and make sure you aren’t overpaying.
- Homemade – Is there anything better than a homemade gift? Obviously, this doesn’t work for every person on your list, but consider baking or making handmade items for some on your list. Enlist your children or grandchildren to bake cookies or make ornaments for neighbors, friends and teachers.
- Experiences – I love the trend of valuing experiences over material items. Show your love with a gift of an experience and maybe even one that you can share as a family. Concert or theatre tickets, holiday shows or activities are a great way to spend time together. Don’t forget to factor these costs into your holiday budget.
- Festivities – If you are attending holiday parties and events, keep track of your spending. A new outfit along with hair and nail appointments can add up quickly.
- Healthy choices – It’s so easy to overindulge during the holiday with so many temptations. Consider gifts that promote a healthy lifestyle and help your loved ones recover from overindulgence or give a gift that encourages self care. Gift certificates to a spa or wellness center are great ways to show you care.
- Financial gifts – Contributions to a 529 College Savings Plan or UTMA Account (Uniform Transfers to Minors Act) are an excellent way to demonstrate the power of saving to our children and grandchildren.
- Cash over credit – If you’ve ever had an issue with out of control credit card debt, stick to cash whenever possible. Credit cards can be a slippery slope, leaving you feeling a lot of regret come January. If you choose to use credit cards for points or rewards, make sure that you have the cash to pay the balance down immediately. Credit can be used responsibly for perks and convenience, but it shouldn’t be a means to finance overspending.
As a Behavioral Financial Advisor, I spend a lot of time coaching clients on healthy spending habits throughout the year. While we can do our best to choose appropriate investments in our portfolio, successful retirement is most often achieved by having a great financial plan that incorporates controlled saving and spending.