The holidays can be a magical time of year, filled with the warmth of family and friends and the joy of giving — or receiving — the perfect gift. But if you’re not careful, the holidays can also be a financial drain — leaving bills that linger long after spring has returned. The key to managing holiday spending is to treat it as you would any other financial goal: plan, budget, and save.
Start with Savings
Not having enough money during the holidays can make you reach for your credit card, adding interest payments to your holiday expenses if you can’t pay the bills off in January. Remember, even a low interest rate adds to the cost of every purchase you make and could negate any bargains you found.
To avoid credit card use, set aside a little money from each paycheck in a special account reserved for holiday expenses. If you start early in the year, saving just $10 a week will give you a nearly $500 head start when December rolls around. The later you start, the more you’ll want to set aside. Check with your bank or credit union to see if they offer special holiday savings accounts or consider a direct deposit from your paycheck. If you never see the money, you’re less likely to miss it.
Build a Budget
With a savings plan underway, your next step is to plan for holiday expenses by setting a holiday budget. In addition to gifts, don’t forget about things like meals out, decorations, and travel. If you still have receipts from last December, you can use them to help plan the coming year’s expenses.
Your goal should be to bring your holiday budget in line with what you have set aside by the start of the holidays. If you find a sizable gap between savings and expenses, try to find ways to reduce costs or save more. Bringing your lunch to work is an excellent way to free up money for savings. Also examine your gift list and non-gift expenses. Do you really need to buy more Christmas lights? Can you eat fewer meals out during the holidays?
Cutting Back on Spending
Last-minute shopping is the easiest way to wind up in debt during the holidays. You can begin to reduce holiday expenses by starting your shopping for next year as soon as the holiday season winds down. Post-holiday sales offer deep discounts on wrapping paper, cards, and decorations.
Gift Giving Alternatives
Creativity is a key ally in managing holiday expenses. One of the easiest ways to reduce gift costs is to give the gift of time. Homemade coupons for a home-cooked meal, an afternoon at the beach, or a pledge to mow the lawn, paint or clean the house, or babysit can be just as valuable as store-bought items. Busy moms and dads can offer coupons promising to take a day off to spend with the kids or to take them to a special place or event.
If you have a lot of people on your gift list, consider a holiday grab. Similar, to the office grab, everyone picks a name of someone to buy for, reducing the number of gifts each person must buy while making sure that no one is forgotten. Buying after the holidays can also work to your advantage. If there are people on your gift list you know you won’t see until after the holidays, postpone your shopping to take advantage of those late-December discounts.
It’s better to give than to receive, especially when you get a tax break. Generous-minded people on your list may be happy with a charitable donation made in their name, and you can potentially pocket a tax deduction.
Planning, budgeting, and creativity can help keep holiday bills in check — and keep you from reaching for credit cards. If you must use credit to balance the holiday budget, use the card with the lowest interest rate and work to pay down the balance as soon as possible after the holidays. The holiday season is more joyous when you’re not still paying for it when summer arrives.
Best regards,
Greg R. Solis, AIF®
President and CEO
Bob Medler, CRPC®, CMFC®, AIF®
Wealth Advisor / Investment Analyst
Tiffany Valentine, CFP®
CERTIFIED FINANCIAL PLANNER™
Vice President | Director of Financial Planning
78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181
www.soliswealth.com
E-Mail: greg@soliswealth.com
E-Mail: bob@soliswealth.com
E-Mail: tiffany@soliswealth.com
CA Insurance License #0795867, 0C05523 & 0D73175
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity. If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
Sources:
Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2019 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This article was prepared by DST Systems Inc. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Please consult me if you have any questions. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
For Public Use: Tracking #1-909321
Exp: 11/2020)