By Eric Reich
Christmas is often called the “season of giving,” but with that comes the other side of “giving.” According to the National Retail Federation, holiday spending is expected to reach record levels during November and December and will grow between 3% and 4% over 2022 to between $957.3 billion and $966.6 billion. While it feels good to give gifts, sticking to your budget is key to helping you not go into debt during the holidays. What are some of the best ways to keep a budget and still have a great holiday season?
The first way to plan for the holidays is to start saving early. Remember the old “Christmas Club” savings accounts? You put in a little money each week and by the end of the year you had all of your money saved for gifts. This is something that needs to make a comeback! Setting up an auto-transfer each week from your checking account, etc. to a separate account that is used only for the holidays is a great way to stay out of debt after the holidays are over. Even just $10 a week means $520 to spend at the end of the year. $20 will give you $1,040. Whatever you want to spend, just divide that number by 52, and that’s what you need to save each week. Saving in advance is only part of the equation. All of that is wasted if once we start shopping, we start using our credit cards. Use debit cards only for your holiday shopping. If you haven’t saved the money before the holidays, then you can’t spend it, period. I know that doesn’t help you for this year since you’re just reading this a few weeks before Christmas but implement this system on January 1, in order to be prepared for next year.
What do you do about this year? Write out your budget before you shop. The simple act of writing something down holds you more accountable for following it. Start thinking about ways to earn extra money over the holidays to pay for all of your purchases. There are always a ton of seasonal opportunities for side jobs around the holidays to earn extra cash. Once you know your budget, you will know exactly how much extra you have to earn (net of taxes) to pay for your presents.
Next, think about why you picked the budget number you chose. Do you really need to spend $1,000, $2,000, $3,000? I know toys cost a lot more than they used to, especially electronics, and inflation isn’t helping, but do kids really need that much stuff? When I was a kid my parents sacrificed so much to give us great gifts at Christmas, but honestly, I can only remember a small handful over all of those years. What I really remember is the time we spent together and the traditions we had as a family even if they were seemingly insignificant at the time. In fact, in recent years my family and I have planned family vacations instead, using the amount we would have budgeted for gifts.
I hope these ideas are helpful both now and for future holidays, and most importantly, I wish you all a safe, healthy, and happy holiday season!
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a
Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations. A lifelong resident of Cape May County, Eric resides in Seaville, NJ with his wife Chrissy and their sons ,CJ and Cooper, and daughter Riley.
