How to Spend Wisely During the Upcoming Holiday Season
Dec 06, 2019 12:12PM
By Virginia Dean
“Buyers need to track their spending,” said Jeff Marks, Senior Vice President and Chief Marketing Officer of the Ledyard National Bank in Hanover. “They need to pay cash instead of using a credit card. When the cash runs out, their budget is spent.”
Prioritizing spending and shutting down impulsive shopping is just one way to avoid financial liability this holiday season. Some quick preventative tips, for example, might include keeping a written copy of expenditures in your wallet, never using monthly payments as a buying guide or accepting a sale price at face value, creating and sticking to a budget set well ahead of time, limiting dining out, using cash instead of credit cards, setting up a holiday savings account, committing to a 24-hour rest period of no spending, or setting gift-giving limits.
“You can set a holiday budget that includes gifts,” said Marks, “but remember to factor in the smaller things like holiday cards, postage and decorations.”
Nathaniel Fisher, junior partner and financial planner at Fisher Financial Advisors, LLC in Hanover, agreed.
“Gift-giving is an important part of the holiday season and no one wants to be associated with Ebenezer Scrooge,” Fisher said. “But remember, you must stick to your individual budgets and try not to go overboard. A budget for gift-giving should be planned year-round. This way, there are no surprises, and you can fully enjoy the holidays.”
Lindsay Hennekey, Marketing Manager and spokesperson at Members Advantage Community Credit Union in S. Burlington, indicated that MACCU “knows how important it is to keep a budget and make our loved ones have a happy holiday season”.
“We recommend, if you need to use a credit card, to use a low-interest card, particularly if you won’t be paying the balance in full,” said Hennekey. “Interest charges can accumulate, so you’ll save money if you don’t rack up those cards.”
Another way to save money, Hennekey noted, is by meal prepping.
“Eating out gets so costly, so keep your wallet in check by making your meals at home and save the money you would spend dining out,” said Hennekey.
Indeed, Randy Becker, owner of the Becker Retirement Group based in Seattle, WA, suggests cutting spending habits in half rather than stopping abruptly. This way, individuals can have their treats and save money as well. Becker estimates that cutting out a $3.89 latte each workday adds up to $933 in savings a year. Skipping the $11-15 lunch out a couple of times a week adds up to $1,400 in savings per year. These two items will net nearly $2,500 that could be put into a holiday savings account.
The importance of creating a budget beforehand and sticking to it cannot be accentuated enough, according to Mark Lilienthal, Digital Marketing Manager at Mascoma Bank in Lebanon.
“The holidays can sneak up on you from a financial standpoint,” said Lilienthal. “From gifts and dining out to babysitters and end-of-year charitable donations, there are lots of ways to spend your hard-earned money during the holidays. Aside from sticking to your budget, when shopping look for deals and avoid using high-interest credit cards.”
Other means of savings include putting year-end bonuses from work into retirement, savings, credit cards or mortgage debt, said Lilienthal.
“It can be difficult to resist the urge to spend in the holiday season but, if you can show some restraint and deliberate planning, you can avoid unpleasantness when the calendar switches to January,” Lilienthal noted.
And, speaking of January, it is the ideal time to start saving for end-of-year spending, said Marks.
“Small amounts throughout the year add up!” Marks said.
At Family Financial Strategies in Lebanon, Financial Advisor/Planner Evan Leary noted that gifts and holidays can overwhelm those who do not plan ahead.
“The best way to plan for these non-monthly recurring expenses is to start fresh and to put your financial house in order,” Leary said. “Gather your wage stubs, income taxes, and all the login information for each separate account and bill. Start by writing down your budget for the year.”
This should include three budget item types: monthly fixed, monthly variable, and non-monthly expenses, Leary explained.
“For all the budget item types, take the annual amount and break it down to monthly,” said Leary. “Next, take your wage stubs and calculate your monthly average income by multiplying your net pay by the number of pay periods and then divide this number by 12 months.”
Compare this average monthly net income to one’s budget, and keep in mind there will be some months that are higher and some that are lower if you are paid every two weeks, Leary said.
“Every two weeks document your expenses and see where they compare to what you budgeted,” said Leary. “This will allow you to have control and flexibility with your spending. You will be able to recognize opportunity cost and use excess funds from one budget item type to supplement another without overspending.”
Lastly, Leary emphasized that it is critical for holiday spenders to look at their tax returns.
“If you received a substantial refund last year, consult with a CPA or accountant to see if you can increase your exemptions on your W4 to spread your refund out over 12 months into your wages,” he said.