The bright lights and decorations. The ads for the latest electronics. The online deals filling our inboxes. The holiday shopping season is in full swing, and everywhere you look, there are enticements to buy.
This is the season of giving, and there’s nothing wrong with treating your friends or family to special gifts. The key is to make sure you’re doing so within your means.
In my line of work at Regions, my goal is to not only help people understand their present financial situations, but also help them have a vision for the future. And it pays to make sure you’re spending wisely today so you’ll still have what you need for tomorrow.
A recent survey from Bankrate shows 56 percent of Americans plan to buy gifts this season with money they already have, rather than relying on debt to finance their purchases. That’s good news, and it’s the method I recommend.
To be clear, I’m not opposed to using credit wisely.
When used within your means, credit is a tremendous tool.
But remember, that credit card bill will be coming due, and if you overspend what you have, you’re setting yourself up to be paying for this Christmas long after the new year begins.
So here are the steps I recommend:
- If you haven’t already, write down a clear budget. Focus first on the essentials: rent, mortgage, utilities, groceries, etc. Prioritize these items over luxuries. Focus your gift-giving on the money you’ll have left after you cover the essentials.
- Spend a little time writing down each person you’ll want to receive a gift from you this season. Then, allocate a portion of the money you have for gifts to each person – and stick to the limit. This can take some of the impulse out of buying and help you make sure you’re not going to face bills in January that you’re unable to cover. When the money you’ve set aside is out – then gift-buying is over. Regions has a holiday budget worksheet, linked here, designed to help you easily plan and track your spending for all the different ways you’ll be celebrating with family and friends this holiday season.
- Go ahead and begin a monthly savings routine. This can be challenging. It’s a discipline. But the rewards are worth it. You might have to start with a low amount. You might need to allocate savings toward paying down existing debt. But when you make the conscious decision to set aside savings, and you focus your spending on the essentials, you can see your financial health improve over time. Financial wellness leads to financial empowerment. And no matter what stage of life you’re in, the best time to begin preparing financially for your future is now. At Regions, we make budgeting tools and financial education available to anyone for free. Just go to regions.com/nextstep, or contact your local Regions branch for personal guidance.
- Use this season as a chance to begin teaching your children healthy financial habits. Ask any parent, and they’ll likely have a story about buying a special gift for their children – and then that gift ends up in a corner and goes completely unused after just a few days. There’s a lesson here. It’s about what you want versus what you need. And it’s about spending money on what someone is really going to use – rather than something that won’t be worth the expense. So how does this apply to teaching children about finances? Personally, I like to give children savings as gifts. It lets them go ahead and understand how to manage what they have, how to prioritize what they spend on what they’ll truly use, and, frankly, how to understand when something might have to wait for when the budget allows it to be bought.
- Finally, remember that this time of year is about many things – family, faith, togetherness, and any number of things that money cannot buy. If you find yourself unable to buy gifts for everyone you want, don’t stress over it. People understand. Your time, and your presence, are worth so much more.
Bottom line – don’t let your finances overwhelm you. And work to avoid spending in a way that leads to excessive bills in the months to come. By sticking to what you can afford, you can focus more on celebrating the season with the people who are close to you – without having to worry so much about how you’ll cover the costs that can come with the holidays.
Lakesha Williams is a Wealth Advisor with Regions Private Wealth Management in Memphis, Tennessee.