It’s the most wonderful time of the year! The holiday season brings with it the warmth of a cozy fire, the peace of spending precious time with loved ones, and the joy of gift-giving. In the excitement of all these holiday festivities, though, it can be easy to get lost in your spending and stifle the progress of your long-term financial goals. With attentive financial planning, you can celebrate the season with loved ones and avoid starting the new year with unwanted holiday debt. The Charleston certified financial planners at Morris Financial Concepts, Inc. are gifting you 4 tips to help keep your spending under wraps this holiday season!
How to Prevent Your Finances from Getting Wrapped Up in Overspending
Despite the financial setbacks resulting from the COVID-19 pandemic, the average American shopper will spend almost 1,000 dollars this holiday, according to the National Retail Federation.
As many families have found themselves in a more difficult financial position this year, it is important to take some extra time to prepare your finances for the season. With proper financial planning, you can still do some holiday shopping without sacrificing all the hard work you have put into achieving your long-term financial goals.
1 – Set a Holiday Budget & Stay Within Your Limits
Bankrate reported that over half of credit card holders would be willing to go into debt during the holidays, especially millennials who are more tolerant of debt. This stance is echoed by the current national personal savings rate (7.2%), which has dropped almost 27% since April 2020 (33.6%). It can’t be stressed enough that you shouldn’t spend more than you comfortably can. Before doing your holiday shopping, figure out exactly how much you can spend without having to sacrifice your goals, whether it be retiring early, purchasing your dream vacation home, or sending your children to a promising university.
If you don’t have savings dedicated to holiday spending, think about what financial resources you can feasibly draw on. This could include an end-of-the-year bonus from your employer, supplementary cash from closet cleanout, or simply finding room in your regular monthly budget. Now, divide your financial resources among all of the things you want to purchase for the holiday season, from gifts to festive decor. If the resulting number differs from your expected spending, keep adjusting them until they match.
Remember, setting a holiday budget is helpful only if you adhere to it. The real challenge is staying within the limits of the budget you set. After all, the holidays are meant to be a time of joy and excitement. You don’t want to add stress to the season by compromising your finances or your long-term goals. As you are doing your holiday shopping, make sure to keep track of your spending. Though it can be overwhelming with the already busy season, keeping tabs on your spending will prevent you from having to dip into your savings account or max out your credit cards. It is an important part of maintaining a healthy financial life. You may want to consider using an app or budget tracking software such as Mint to easily consolidate your transactions, returns, expenses, and credits.
2 – Make Your List, Check it Twice
Once you have determined your holiday budget, the next step is to decide what (and who) you want to spend it on. During this season, it can be difficult to curb spending habits, especially if you express affection through giving. Our Charleston wealth advisors recommend starting with the basics: divide everyone on your gift list into groups (friends, co-workers, immediate family), set a dollar amount for each, and add together. Keep in mind, this total should fall well within your predetermined holiday budget.
As you are solidifying your planned holiday spending, make sure to account for supplies you might need besides just presents, including wrapping paper, ribbon, bows, postage stamps, priority shipping, festive decorations, and yes, even ugly Christmas sweaters. This will help you avoid a surprise expense that may lead to overspending down the road. Though many families are remaining at home this year, if you do plan on traveling, make sure to account for gas, airline tickets, baggage fees, pet-sitters, and parking or car rental costs. If you plan on enjoying a delicious holiday meal with loved ones, you should include this in your budget, too. If the final amount matches the budget you created, you are on track to keep your holiday spending under wraps!
Though some friends and extended family may not be on the spending list, that doesn’t mean you can’t share the Christmas spirit with them. Generosity can take many forms, including kind gestures, thoughtful acts, festive crafts, and small but sentimental gifts that can mean more than any purchase from a store. Be a savvy shopper with the presents you do purchase. The internet is a great place for some comparative shopping to get the best deal possible, without the crowds and checkout lines. Online shopping has become even more of a hot commodity during the pandemic, and many businesses are running specials exclusively online. There are also endless tools available online that can instantly find the best savings codes for you, including Honey, RetailMeNot, and Groupon. Plus, many online stores offer free gift wrapping and shipping, if you aren’t able to be with loved ones in-person this holiday.
3 – ’Tis the Season for Responsible Giving
With the unprecedented year we have experienced, families across the world will, unfortunately, go without any presents this holiday. Many of our neighbors struggle to make ends meet, eat, and keep the lights on. If you can afford to be generous this season, there are endless ways to give back, as many of our clients already do. Charitable giving may already be part of your long-term financial plan, and the Christmas season is the perfect time to further contribute to causes you are passionate about supporting. You may also consider donating to a special cause on behalf of someone on your gift list, rather than giving them a physical present. To learn more about how you can give back to the community, read our blog on donating responsibly.
The holiday season is about more than presents underneath the tree – it is about the love and joy we share with loved ones. There are endless ways to show others you care without having to spend more than your budget allows. Time spent together (even if it is virtual!) is worth much more than a gift you spent a lot of money on. Spread the Christmas cheer and enjoy the holidays with loved ones while staying within your budget by incorporating festive traditions that cost little to no money, such as:
- Gathering the household for a special breakfast
- Reading your favorite holiday stories
- Sipping cocoa while watching a holiday movie
- Baking seasonal cookies all together
- Doing some holiday-inspired crafts with young ones
- Sharing a festive cooking class on-line with friends
- Sending a cheerful card with a picture to loved ones who might be lonely
4 – Get Ahead for Next Year With Our Charleston Wealth Advisors
Don’t wait until the last minute to create your holiday budget, list, and plan. Getting ahead of the season is the best way to manage your spending. Meet with a financial planner early on to see how you begin putting money aside for a holiday nest egg, without having to sacrifice your aspirations and goals. Remember, the earlier you get your holiday shopping done, the better! Not only will there be a better selection of gifts and supplies to choose from, it will make an already hectic time a bit less chaotic. That way, you can focus on the real reason for the season – spending time with those you care about.
Maintaining a healthy financial life should always be at the top of your wish list, no matter the season. With the help of Morris Financial Concepts, Inc., you can make progress towards your financial goals, even during periods of heavier spending. Our Charleston wealth advisors are passionate about helping clients around the world lead a happier and more fulfilling life with unyielding advocacy and a holistic approach to wealth management. Let’s make the upcoming year the best yet, together!
Connect with our Charleston wealth advisors today to begin planning for a healthier and more balanced approach to financial wealth management for the holidays and beyond.
This blog is sponsored by Morris Financial Concepts, Inc. (MFC) for educational purposes only. The topics discussed are not intended to be investment advice or an offer of any particular security. The opinions expressed within each posting represent an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The blog does not constitute a general or personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. All of the opinions expressed herein are subject to change without notice, and you should always obtain information and perform due diligence before investing. MFC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Morris, including our investment strategies, fees, and objectives, is available upon request.