How to make money-smart gift decisions and not run up your bills.
With nearly a third of Americans out of the workforce, or working just to make ends meet, buying holiday gifts can lead to greater debt as well as increased stress, family arguments, depression, loss of sleep, headaches and even anxiety if not planned out properly. Expressing love, gratitude and thanks should not be a financial burden to the gift giver.
Worrying about the backlash from disappointing others should be less important than considering the damage you can cause to your personal health and wealth by overextending your credit cards. Still, many people may not want to scale down their holiday gift spending patterns in fear of disappointing family members and loved ones.
While it may bring you tremendous satisfaction to see your spouse or significant other and kid’s expressions of joy and amazement while ripping open their holiday gifts, consider to utilize this time of year as a “teachable” moment on both gratitude and personal finance. Have your loved ones create a gift “wish-list” in advance, while setting reasonable expectations with them up front. As responsible parents, educating your kid’s about the value of money and becoming “fiscally responsible” may be a gift that will benefit them long after the excitement of the holiday season is over.
Shoppers around the country say they are planning to spend an average of $861 for gifts this holiday season, up from $801 last year, according to the annual American Research Group (ARG) Holiday Spending Report. Consider the following 5 key strategies to reduce your holiday spending headaches.
1. Set a budget amongst friends or family members so there are no surprises or judgments made on gifts given. Make every effort to buy gifts with cash and or credit cards you can pay off in a month. Do not rack up thousands of dollars of debt knowing you may be paying exorbitant interest rates on these gifts for the next year while carrying high balances that could inadvertently hurt your credit score.
2.Pull family resources: Consider group gift exchanges where each person chips in an amount of money to buy another family member a gift that may be nicer than what you could have afforded to buy yourself.
3.Combine a gift with a future vacation: Buy something you can do together with your spouse, loved one or child. For example, purchase a trip or a cruise as a needed vacation. By combining a holiday gift with a future vacation, you are saving money and providing an experience you both will remember for years to come.
4.Get creative: Making gifts from scratch can be a great way to save money this holiday season. Don’t worry about being too thrifty. A recent article by MSN Money indicated that 70 percent of people plan to make something instead of buying something this year. You may actually really impress someone you love with your baking, photography, art, building or knitting skills.
5.Give the gift of education: Contribute cash to a kid’s 529 prepaid tuition program or a 529 savings program. Or consider to purchase a small amount of stock for a kid in a “custodial account” and give them a framed- stock certificate as a gift. There are a few reputable online retailers that provide this service in a few easy steps. Purchase a stock from a brand they will be familiar with (such as Disney) and review the value of the stock with them every December. In addition to teaching a young kid about Wall Street, hopefully, this will be a gift that keeps giving!
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.