The holiday season! It's a wonderful time of year filled with love, togetherness, and a lot of spending! The average person will spend at least $794 this year.
Here are some tips on how to reduce the financial burden this season has on you!
Start saving on 1/1
Spending during the holiday season goes up dramatically. Everyone has gifts to buy and food to purchase for holiday dinners.
To reduce the financial burden the holiday has on you, start saving right away. There are several holiday savings plans out there. Some of them start by saving a little, then it gets incrementally larger throughout the year until July, then it starts to work it’s way back down up to December.
The one I use is to save a little bit every week. The amount fluctuates between $15 and $25 per week, depending on how our finances are during that particular point in time.
This is a great line item to include in your budget!
If you start early and save consistently, you’ll have a lot set aside for your holiday shopping. Which brings me to my next point.
Avoid going into debt for gifts
There’s a lot of pressure during this time of year to spend extraordinary amounts of money on your loved ones. Not all families are like this, but it’s sad to some extent that we go to such lengths to show people that we love them.
People understand. Not everyone’s financial picture is the same, so don’t feel bad if you can’t spend $20 to $50 to $100 per person this season. There are other ways to give a gift without spending into the negative.
- Make it yourself - some of us are more creative than others so this is a great way to save some money.
- Shop at a thrift store - they have more than clothes there.
- Use eBay or Craiglist
Obviously, you have to use your judgment with some of these, but you really can find great things for a fraction of what they would normally cost from a store. If you do find yourself going into debt, here's how to get out.
Hosting dinner? Make it a pot-luck
Buying groceries to feed yourself and your family
Instead, make it a pot-luck. Each person/family attending will bring a dish of some sort. This lessens the burden on the host and makes other people feel good for contributing. If you are lucky, this idea will stick and the person hosting every year thereafter won’t be stuck with a huge bill to feed the family.
- Sell losses to offset gains - if you received dividends or realized some gains, sell some losers to reduce the amount of taxes you would otherwise pay on those gains.
- Sell gains to offset losses - if you sold some losers this year, now might be a good time to sells some winners as well. The market has been quite ugly this year, so if you have winners to spare, good for you!
- Contribute to HSA - Make sure, if you can, max out your HSA. Tax-deductible contributions!
- Spend FSA - An FSA is a use it or
loseit, so if there’s money left in it going into the new year, you are flushing it down the toilet.
- Revisit 401k/403b contributions - Again, if you can afford it make additional contributions to your employer-sponsored plans.
- RMD - If you are 70 ½ or older and have a qualified account (retirement account - IRA, 401(k) you have to withdraw a certain amount from your account. The amount is calculated using your account value at the end of last year and your estimated life expectancy. If you fail to withdraw what they require, you will be assessed a 50% tax penalty on that amount.
- Give to charity - Help someone in need and
donateto a charity that is meaningful to you. Not only are you giving to someone that needs it, but you can also deduct the amount you donate from your taxes.
What it's really all about
The holiday season isn’t about receiving gifts and spending crazy amounts of money. It’s about giving and spending time with loved ones. Give to someone who needs it,
Hug your people, say I love you, and enjoy every second with the people that mean the most. They make your life worth living, show them what they mean to you.
If you’d like to learn more about saving for the holidays and how to end your year on a high note, drop me an email!
I wish all of you the very best and a very Happy Holidays!