Seasonal Strategies: Handling Holiday Financial Woes

Trent Bradshaw CFP®, AIF® & Brandon Rogers CFP®, AIF® |

We know when the holidays are going to be all year long, so we should plan accordingly! Many of us get so caught up in the holiday madness that we toss our budget aside and fall into what seems to be a never-ending spending cycle. Last year’s report shows about 51% of Americans overspent their budget on holiday gifts and 28% are still paying off holiday debt from the previous year. You don’t have to head into 2022 regretting your year-end splurges. Here are some ways you can get back on track:

  • Pay Off Your Credit Card Debt: “Plastic is king.” Credit card debt can linger for months, straining your budget and keeping you from reaching your financial goals. Check the interest rates to see which credit card charges the highest APR rate and concentrate on paying that debt off first. Remember, paying more than the minimum is not only good for your credit, but for your overall financial well-being.
  • Reconsider Your Gifting Strategy: During the holiday season, it may be hard to resist those sale racks and promotional signs. Reconsider your impulse purchases and return or exchange unnecessary items. Also, if you receive gift cards or cash gifts, consider applying them toward your new budget.
  • Revisit Your Budget & Plan Ahead: Don’t fall into the same financial traps. It’s in your best interest to set goals at the beginning of each year and learn from your mistakes from the past. A suggestion is to calculate the total you spent this year so that you can take into account how much you’ll need to set aside to prepare for the next holiday season.
  • Set Holiday Spending Limits: Give your credit card and your mind a holiday by limiting what you buy to what can safely come out of your bank account. Use this opportunity to create or get your budget into fighting shape, and use it to decide how much money you can afford to spend. Remember to be realistic about what you are willing to sacrifice. You may spend your monthly clothing budget on holiday gifts, then come up empty when you need new snow boots.
  • Make Your Own 'Naughty or Nice' List: Santa has to buy presents for the whole world, but you don't. If your shopping list includes more than five people outside of your immediate family, cut down on the number of people on your present list. Then, bake some cookies to give to all the people you snipped from your original gift list. This will ensure you spread the holiday cheer and keep you from looking like Scrooge.
  • Be Realistic About Your Budget: Your older brother paid off his student loans five years ago, and he always gets you the fanciest presents. However, if you are in a different place in your financial life, you shouldn't follow suit.
  • Give the Gift of Your Time: Mom and dad (or other far-away family and friends) might love nothing more than a visit from you. Another idea? Writing up a "free night of babysitting" card for your family members with young children, or a "good for a home-cooked meal" certificate for your widowed aunt that can be used when the time is right.
  • Build Better Spending Habits: Get over the how-am-I-going-to-pay-off-my-credit-cards-next-month anxiety by giving yourself the gift of developing new-and-improved spending habits. For example, for every dollar you spend on gifts, you could find a way to remove that dollar from your regular spending. Around the holidays, you can use those savings to buy presents, but next month—and the rest of the year—what you save can go into your savings account.
  • Provide Personalized Gifts: A small, thoughtful gift is worth more than an expensive gift that someone may never use. Avoid impulses to shop at trendy stores and start the holiday by taking a moment to think about what those on your list could really use. For example, if your sister loves to bake but can't get the hang of homemade pie crusts, you could buy her a simple pastry-making tool for less than $10 and include a copy of a fool-proof recipe.

All life and financial decisions, including holiday splurges, can significantly throw you off course. Let us help you kick 2022 off on the right foot by calling us at 704-216-2260. Together, we’ll review your financial position and solidify a plan that’ll help steer you back inside the lines towards achieving your goals.


Adapted from Retirement Living and Investopedia