Financial expert Rachel Langlois shares tips on how to be financially smart this holiday season. For more information about Cyprus Credit Union, go here.
During the holidays it can be easy to overspend, here are some of the biggest mistakes people tend to make:
- Not Sticking to a List
- Create a budget: It is advised for families to not spend more than 1.5% of their annual income on holiday costs. This includes gifts, decorations, travel and entertaining. But if you are in debt, consider that every dollar you spend costs you more than that once interest is factored in. Look at what you can realistically afford and if you would like to spend more, look at where you can cut costs to make up the difference.
- Budget Based on Your Own Finances: Do not feel pressured to spend more than you can afford because someone else has given you a more expensive gift. Friends and family will respect your efforts to not accumulate debt on their behalf.
- You Are Not Santa: You do not need to give gifts to everyone you know. Outside your family and closest friends consider if it is necessary to purchase a gift, consider a homemade gift or exchanging baked goods. They too may appreciate the relief on their budget. If you have a large family, suggest new traditions such as a gift exchange or setting a budget and seeing how creative people can get.
- Create a list of gifts: List out those you will need to purchase gifts for and determine how much you will spend—and then stick to it. Do not go shopping without your list to prevent over-budget impulse purchases.
- Decide gifts in advance: decide what items you would like to purchase for individuals before going to the store. This allows you to comparison shop, especially using online retailers. Consider the retail value and do not feel the need to buy additional gifts if the item you had decided on was bought on sale; put the saved dollars back into your budget for unexpected costs.
- Spending the Same on Each Child: Just because you may have spent a little more on one child, avoid the temptation to spend more on the other children to make it what you’ve spent equal or “fair.” Children look more to the perceived value than the price you actually spend. Also focus on creating realistic expectations with your children if their wants outweigh both their needs and your budget.
- Overlooking Other Costs: When establishing budgets don’t forget other expenses such as wrapping supplies, entertaining cost, special meals, sending cards or decorations.
- Create a menu/shopping list early: This enables you to watch for the needed items to go on sale and stock up throughout the year or at post-holiday sales.