By iA Private Wealth, November 25, 2022
In a typical year, holiday season can strain your finances if you don’t spend carefully. This year, as inflation and higher interest rates have raised the cost of living, you might face even greater financial challenges.
To avoid the “January blues” (when bills arrive and people realize how much holiday-related debt they’ve accumulated), here are five tips to help budget for the season. You may be familiar with some of these tips, but it doesn’t hurt to reinforce them as everyone tries to control holiday spending.
Tip #1: Create a holiday budget
For most large expenses, start with a budget in mind. With all the events and gift giving that occurs in December (hosting meals, dining out, drinks with friends, etc.), it can be difficult to know exactly how much you’ll spend. This budgeting guide will help you plan ahead by estimating the cost for holiday gifts and activities.
Tip #2: Open a holiday savings account
It may be easier to track your expenses if you open a separate account specifically for holiday spending. This way you can see all your spending in one place. If you set aside savings all year round, it may be advantageous to open a High Interest Savings Account (HISA). You’ll be able to earn monthly interest on your balance, helping you grow your holiday funds all year long.
Tip #3: Think outside the gift box
Supporting causes that are important to you and your family can be a meaningful and fulfilling way to re-think your gift giving this holiday season. There are several ways to give back to the community while sharing this experience with others. In lieu of a gift, you can make a donation on someone’s behalf, bring loved ones to a donation drive and help out together, and even start your own family charitable fund.
Tip #4: Research debt options
It is easy to overspend on your credit card during the holidays and simply pay the minimum balance every month. However, credit card interest rates are among the highest rates available. There are many other options for borrowing money that will cost you less in re-payments. A little research into various debt options through financial institutions can go a long way if you think you may need to borrow funds this season. After the holidays, keep on top of your bills and pay off as much of the balance as you can each month. It will reduce your total interest paid and give you a sense of accomplishment for (hopefully) staying disciplined and managing your finances well over the holiday season.
Tip #5: Enjoy this time with your loved ones
The planning, expenses and flurry of the holidays can be stressful. Don’t forget that this is a time to enjoy yourself and the company of your friends and family. When it’s all over, you’re likely to remember the people you spent time with the most, while everything else will fade into the background. And the best part? That’s free!
Happy Holidays from iA Private Wealth!
Contact us today to learn more about how to manage your finances through disciplined planning, saving and spending.
