I often read information that I feel would be helpful to clients. Today I would like to share with you a few tips from a financial planner I subscribe to. As a bookkeeper, I often see credit card debt skyrocket because of holiday shopping and events. This can have a detrimental effect on your long term finances and goals, so I wanted to share this information to help you avoid increased debt as much as possible this month. Below are ideas from Angela Dorsey of Dorsey Wealth Management to help you stay on track.
1. Get over the guilt
Are you buying that gift because you haven’t spent enough time with that person? Are you trying to make up for something you’re feeling bad about? It’s important to ask yourself if spending a surplus of money on a gift is really going to help you achieve the goal of gift-giving in the first place.
2. Set a budget, spend within it
It is crucial to establish a budget BEFORE you go shopping. Don’t spend more than you can pay back in one month. You’ll still have to pay your regular bills just like the other 11 months of the year plus all those added holiday expenses.
3. Always pay for purchases with a debit card
If you can’t pay with debit, you can’t afford it.
4. Don’t let a gift put a value on you
Some people value themselves based on their spending choices. People become consumed in what they believe they’re expected to purchase. Think about what you can afford. What is the meaning and value behind your gift? The gift may not cost much, but may be worth more to the recipient than the price.
5. Put meaning into your gift
Donating to a charity of your choice in a loved one’s name is a fantastic way to show you care while staying within your budget. Research a charity or organization that holds special meaning to your recipient and honor them while helping somebody else in need. Handmade and baked items also make thoughtful gifts and are nice to receive.
6. Start the New Year right
Create a monthly expense budget and examine what you’re actually spending each month. Set your spending and saving goals early in the year.
By following these ideas, you will be able to carefully decide on purchases to make and stay within your budget. Avoiding purchasing items with a credit card that will incur finance charges if not paid off is a wise idea as well. I hope you and your family have a very enjoyable holiday season!
Angela Dorsey is a fee-only financial planner with Dorsey Wealth Management. More information can be found here including services and free tools.
