Manage Your Money Carefully This Season
As you know, the holiday season can be joyous, hectic, celebratory — and expensive. And while you certainly enjoy hosting family gatherings and giving presents to your loved ones, you’ll find these things even more pleasurable if they don’t add a lot of weight to your debt load. And that’s why you’ll want to follow some smart money management techniques over the next few weeks.
To begin with, try to establish realistic budgets for both your entertaining and your gift giving. When you host family and friends, don’t go overboard on your expenditures. Your guests will still appreciate your efforts, which, with a little creativity, can create a welcoming and fun experience for everyone. As a guiding principle, keep in mind these words attributed to Johann Wolfgang von Goethe, the famous German poet and philosopher: “What you can do without, do without.” Set a budget, and stick to it.
The same rule applies to your gifting. You don’t need to find the most expensive presents, or overwhelm recipients with the sheer volume of your gifts. This is especially true if you, like so many people, have been affected by the tough economy. Everyone you know will understand that gifts don’t have to be lavish to be meaningful.
Furthermore, by sticking to a budget, you won’t be tempted to dip into your long-term investments to pay for fabulous parties or mountains of gifts. It’s never a good idea to tap long-term investments for short-term needs, but it can be especially bad when your investment prices are down, as they may well be this year.
So, if you want to stick to a budget but don’t want to raid your investments, how can you pay for your holiday season expenses? If you can spread out your purchases, you may be able to pay for them from your normal cash flow. But if that’s not possible, you might want to consider “plastic” — your credit card. Using your credit card does not, by itself, need to amount to a financial setback, especially if you’ve chosen a card that offers favourable terms and you’ve already shown the discipline not to overuse that card. Just try to minimize your credit card usage over the holidays and pay off your card as soon as you can.
Of course, you can make your holiday season much easier, financially speaking, if you’ve set up a holiday fund to cover your various expenses. While it’s too late to set up such a fund this year, why not get an early start on the 2012 holiday season? All you need to do is put away some money each month into an easily accessible account, separate from your everyday accounts. You don’t have to put in a great deal, but you do need to be consistent, which is why you may want to have the money moved automatically, once a month, from your chequing or savings account to your holiday fund. When next year’s holiday season rolls around, you might be pleasantly surprised by how much you’ve accumulated.
But for now, following some common-sense money management practices can help you get through the holiday season in good financial shape — and that type of result can get your new year off to a positive start.
*Edward Jones does not provide tax or legal advice. Review your specific situation with your tax advisor and/or legal professional for information regarding, or issues concerning, the tax implications of making a particular investment or taking any other action.
** Insurance and annuities are offered by Edward Jones Insurance Agency (except in Quebec). In Quebec, insurance and annuities are offered by Edward Jones Insurance Agency (Quebec) Inc.
Ryan McLellan, Financial Advisor
Edward Jones Barrhaven