A Holiday Survival Guide for Your Finances

The average family spends an extra $1,000 or more during the holiday season. From gifts and travel to dinners, shows, and decorations, each purchase adds up.¹ How might you take full advantage of holiday cheer while avoiding the financial stress of going over budget? Here are four tips to help your budget have a happy holiday season.

Set Aside Holiday Funds All Year Long

Whether you plan to spend more or less than the average family, break this amount down into manageable portions of 12 monthly payments (or 52 weekly payments). Put these funds into a savings account. Depositing these funds into a savings account or another account may allow you to practice the saving strategy of "out of sight, out of mind." This technique may help avoid the temptation to withdraw from this account throughout the year. 

Anticipate Non-Holiday Expenses

One of the biggest holiday budget-busters might be large expenses that arise toward year-end, such as: 

• Insurance
• High heating bills
• Property taxes
• Auto registration
• Estimated tax payments

It’s a good idea to carefully examine your expected year-end expenses so that none surprise you. 

Keep an Eye Out for Deals 

There may be multiple savings opportunities year-round. If you have the storage space, you may find it worthwhile to stock up on gifts or stocking stuffers throughout the year. Don’t forget about Black Friday, Boxing Day, and Year-End Clearance sales. During early January, you may be able to pick up wrapping paper and holiday decor at lower prices to store and use for the following holiday season. 

Take Advantage of Credit Card Rewards 

Many credit cards offer cash back, store discounts, discounted gift cards, and other rewards.² Running some of your regular expenses and bills through your credit card, then saving these rewards for year-end may provide you with a built-in source of savings for the holiday season. And if you’re taking out a new credit card, you may qualify for an introductory reward if you spend a certain amount of money during your first few months of card ownership.

There is one major caveat to consider. Credit card rewards lose their nominal value if you pay a significant amount of interest on a credit card balance. You may not need to carry a balance to improve your credit score or get rewards, so it’s worth reviewing your budget if you cannot afford to pay off your monthly credit bills. 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05337697.

Footnotes

¹ Average Cost of American Holiday Spending, Investopedia,
https://www.investopedia.com/financial-edge/1112/average-cost-of-an-amer...

² Are credit card points taxable? Here's when you may have to pay taxes on your rewards, CNBC,
https://www.cnbc.com/select/are-credit-card-rewards-taxable