How to Be Penny-Wise Over the Holidays
Smart Spending with slice.ca: Conserve those extra pennies this holiday season
With gift giving, party planning and extra travelling, the holidays always bring on a lot of extra spending—even if you don’t celebrate, you’re likely to end up at a holiday party at some point. With our wallets hurting from the current financial climate, this is a great year to start re-evaluating the way you spend money during the holidays and learning how to cut back without sacrificing any feelings of warmth, joy, or sibling rivalry.
Manisha Thakor (http://manishathakor.com/), an internationally acclaimed expert on women’s personal finance, is here to help smart slice.ca ladies learn how to make every penny count this holiday season. Her all-important three holiday budget pointers are simple: be honest, be creative, and plan well.
Be Honest
When you’re planning for the holidays, there’s temptation to show off and buy your loved ones lavish gifts to demonstrate how much you care. But can you afford those gifts?
“Men tend to equate the holidays less with material possessions than women,” says Thakor. “If you’re honest with yourself, many things on your list will be low cost small joys: baking holiday cookies, driving around and looking at pretty holiday decorations.”
Thakor also warns against the thrill of charging gifts on our old plastic pals. She says the biggest budget mistake women make during the holidays is whipping out our credit cards when we can’t afford it.
“If you can't afford to buy the gift for cash, or to pay off that credit card in full when the bill comes at the end of the month, you can't afford it!” Keep this in mind when you’re applying for store credit cards as well. The introductory rates don’t last forever and after the grace period, you’ll be stuck with an incredibly high interest rate.
Be Creative
As Thakor mentions earlier, there are lots of fun ways to spend time with loved ones without spending a whack of cash. Thinking of creative ways to enjoy the holidays can cut down on unnecessary spending—and those are the times you’ll probably remember long after your fancy iPod’s battery dies out. Thakor also suggests using the holidays as an opportunity to teach your kids the value of a good old-fashioned savings account instead of splurging on the latest gadgets and toys.
“Open up a savings account and contribute as much to it in your kids’ names as they’ve earned that year,” Thakor suggests, “If your child has earned $200 mowing lawns or babysitting, put that in.”
In other words, if you and your son both contribute $200 a year until he’s 65, and his investments go up 10 percent, he’ll have $875,000. “Now that,” says Thakor, “is a gift that keeps on giving.”
Of course, you’ll probably have to spring for a few stocking stuffers, too.
Plan Well
All of that is a great way to start planning for your kids’ financial future. But what about the money you have now? The easiest way to avoid overspending is to set a budget and stick to it. Lots of people set dollar limits for gifts, which is a great idea. You can also challenge one another to come up with creative thoughtful gifts rather than extravagant ones.
Thakor maintains that you have to decide whether you want to buy expensive gifts for a few people, or cheaper gifts for a lot of people. The biggest danger, she says, is buying pricey gifts for a lot of people.
In terms of next year’s holiday shopping, you know you’ll be spending money, so start saving in January. If you can, skim a bit off the top each month and put it into a separate account. That way, next year, you’ll know exactly how much you’re allowed to spend and you’ll know that you aren’t going into debt to buy your friends and family gifts.
Thakor’s last thoughts: “When planning for next year, it's a good time to make sure your money is going towards the things that bring you the greatest amount of joy. Next year, when you see something you want to spend money on, do the math. Divide the cost of the item by your hourly income and ask yourself if it's really worth it!”
Written by: Nicolle Weeks