Managing Your Cash Flow This Holiday Season
For many Americans, the holiday season is one of the happiest times of the year and for good reason. There’s nothing better than spending time with loved ones, eating good food, listening to Bing Crosby sing “White Christmas”, and sharing presents. Unfortunately, that last part can become very expensive and make our stomach drop when the credit card bill arrives in January. Here are some tips to help you manage your cash flow this holiday season.
Know Your Limits
In a day and age when we are constantly being bombarded with ads telling us we need the latest gadget, it can be hard not to splurge. This is especially true when it comes to buying presents for those we care about most during the holiday season. According to a survey from the American Research Group, Inc., Americans are planning to spend on average close to $1,000 for gifts during the 2017 holiday season.
It’s important to know your limits before you start your holiday shopping. We recommend setting a budget for what you can comfortably spend on gifts without accumulating credit card debt. Credit card debt (and debt in general) is one of the leading causes of stress for Americans and according to billionaire Mark Cuban, “credit cards are the worst investment that you can make.” If you charged $1,000 to your credit card for gifts this year and made only the minimum payment ($25) on a 20% interest card, you would still be making payments over five years from now.
Talk to Your Family
If you find it hard to make a budget work for the holidays, talk to your family members about how to make giving gifts more feasible. One idea is to do a “Secret Santa” gift exchange for the adults. Every adult in the family picks a name out of a hat and you’re only responsible for giving a gift to that one adult. That way, the children in the family still receive presents. Chances are, your family members would welcome the relief too.
Another idea is to talk to your children about what you can realistically provide in terms of gifts. If your children are old enough to know where presents really come from, you can use this opportunity to discuss the importance of budgeting. Decide what you can afford for each person in the family and communicate this to your children. Your children will learn a valuable life lesson on budgeting and will hopefully thank you later on.
Start Saving Now
Perhaps you haven’t been the best at avoiding credit card debt during the holiday season. Now is the best time to start planning for next year. As part of your monthly budget for 2018, create a line item for holiday savings. Decide how much you want to spend on gifts each year and divide that amount by twelve. Set aside that amount each month in a savings account. By the time next December rolls around, you will feel like a champ knowing you won’t have to incur credit card debt!
If you have questions on how to manage your cash flow, budget, and save, River Capital Advisors, LC can assist you. We also help clients in other areas such as investments, retirement, education, and estate planning. Please contact us if we can assist you.