Don’t let finances cause added stress this holiday season! By avoiding these 4 common holiday spending pitfalls you can ensure that your holiday season truly is the most wonderful time of the year.
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Pitfall #1: Not having a plan
Don’t be tempted to spend like January isn’t happening. To curb your holiday spending appetite, create a budget and plan—the more specific you can be, the better. While creating this plan, keep your financial goals front and center. Not only will this help you to keep on-track to achieve your goals, it will also help you stay realistic with your holiday budget.
As you begin, a great place to start is to solidify your travel plans (see Pitfall #3 for more). Creating a gift list will also help you shape your budget, and make sure you’re not forgetting a gift for any of the important people in your life.
Bottom line: Create a budget and plan then stick to it.
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Pitfall #2: Creating Your Budget on Bonuses
Holiday bonuses are great, but not guaranteed. If you’ve gotten into the habit of using your holiday bonus for your holiday spending, try something new this year. Create your holiday budget based on your normal monthly income.
By basing your budget on your monthly income, you can set a realistic budget and not gamble your finances on a bonus that may or may not happen. In the event that you do receive a bonus, you can use it to pay down debts, add to your savings, or invest for retirement. Read more about the 7 Smart Ways to Spend Your Holiday Bonus.
Bottom line: Use your normal monthly income to create your budget.
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Pitfall #3: Waiting Until the Last Minute
The trade-off of waiting until the last minute? Money. By creating your budget and acting on your plan early you’ll have more opportunities to take advantage of holiday sales, coupons, promotions, and price comparing.
For most people, their biggest holiday expense is travel. Generally, the more time between booking your holiday travel and your travel dates, the more money you’ll save. Solidifying your plans early helps you have the time to price compare and take advantage of holiday promotions.
Bottom line: The earlier you begin planning and shopping, the better.
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Pitfall #4: Letting Guilt Break Your Budget
Getting caught up in the idea of giving extravagant gifts to prove you care can have dramatic consequences on your finances. When it comes to finding thoughtful gifts that won’t break the bank, your options are unlimited.
If you have the time and talents, handmade gifts or homemade foods are incredibly thoughtful. If time is limited, support local artisans who sell their products on sites like Etsy or West Tenth. You can also visit your community holiday market or farmers markets to find gifts.
A solution that will save you both time and money? Setting up a gift swap. Everyone walks away with one awesome gift instead of lots of little gifts.
Bottom line: Don’t break the bank to keep up with someone else’s budget.
This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.