Four Ways to Save Money for the Holidays
The holiday season is supposed to be a time of enjoyment and relaxation spent with your family. However, the holidays can be a stressful time due to the expensive expectations of gift giving. The average consumer spends $1,226 on holiday gifting, while consumers with incomes exceeding $100,000 spend on average $2,226. Read the four simple tips below to better manage your finances this holiday season.
1. Create a Budget
After holiday shopping is done, many people agonize over the excessive money that they have unintentionally spent on gifts for friends and family. To prevent the unnecessary stress and regret of over spending and impulse purchasing, it is wise to set a pre-determined budget for each gift you plan on giving. When doing so, however, it is important to set a realistic budget to make sure that you have enough money for the gifts you intend to purchase.
To stick to a relatively tight budget, it is crucial that you are allocating your money effectively. Do not forget to budget for miscellaneous expenses such as wrapping paper, holiday activities, and food or drink.
2. Save Up
One of the easiest ways to decrease stress is to prepare for it. Saving money to make holiday shopping easy and enjoyable is not as much work as you may think. For example, if you plan to spend $1,000 on gifts, setting aside just $3 each day can bring you to your goal. Think about opening a holiday savings account where you can earn interest on your money to get ahead. Saving money during the holiday season can be as easy as cutting out some extra seasonal purchases, as people have a tendency to overindulge during the holiday season.
3. Be Mindful of ‘Sales’
A sale during the holidays always seems like a jackpot. However, many companies use marketing tactics to convince you that you are getting a great deal when in reality, you could find the same item for a lower price elsewhere. Sale items convince people to impulse purchase or buy more of an item than they originally intended, causing them to spend more money than necessary. Do your homework to make sure you are actually getting the “best deal”.
4. Think Ahead
It is easy to make a quick purchase on an overpriced, somewhat impersonal item. However, many of the most cherished and enjoyed gifts can be made or purchased at a much cheaper price after giving it more thought or buying your gifts early. Likewise, spending money on activities that can be enjoyed with family is oftentimes much more valuable than any material gift.
Improving your Strategy
The good thing about holiday shopping is that if you go over your budget one year, you can always come up with a new plan for the next. It does not take long to look back on what you spent money on and what you could have saved on. Tracking your spending is not as much work as it may seem. Creating a spreadsheet or downloading an app to make sure you are on track is an excellent way to establish your finances and help you reach your goals. If you acquired credit card debt this season, it may be a good idea to come up with a payoff plan.
In summary, plan your finances proactively for this holiday season to ensure a stress free time with family and friends. It is easy to get caught up in holiday marketing campaigns and overspend on gifts. With a plan in place to save up money, make smart purchases, and avoid impulse buying, you will be able to navigate holiday shopping with relative ease and make the most of the holidays. Please Contact a Heck Capital Advisor for help with a holiday savings plan.
Authored by Michael Bogard, CFA on December 20, 2018
About the Author: Michael Bogard, CFA is a Business Development / Client Relationships Senior Associate at Heck Capital Advisors. Michael earned the right to use the Chartered Financial Analyst® (CFA®) designation after completing the program in 2018, fulfilling the work experience requirements, and gaining acceptance as a member of the CFA Institute. The Chartered Financial Analyst® (CFA®) charter gives a strong understanding of advanced investment analysis and real-world portfolio management skills. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.