Approaching the holidays without a budget can lead to overspending and a debt hangover. Try these holiday budget planning tips from EP Wealth Advisors for managing your spending this season. Find a financial planner near you.
Mastering Holiday Budget Planning: 5 Tips to Manage Spending this Season
The year is winding down, and it’s time to consider holiday spending. Between gifts, entertaining, and travel, this can often be the most expensive time of year. Try these holiday budgeting tips from EP Wealth Advisors to stay focused on your financial goals and hopefully avoid a debt hangover.
1. Review Last Year’s Spending
The first step is to reflect on how much you spent last year for the holidays. Review bank and credit card statements from this time last year, which should be available online. These numbers are a good starting point for this year’s budget. Just be sure to increase these costs slightly to account for inflation. Over the last 12-month period, the price of consumer goods and services has increased by 2.5 percent, according to the U.S. Bureau of Labor Statistics.
2. Inventory Holiday Expenses
Next, make a detailed list of your holiday expenses. Create separate categories for gifts, travel, dining, clothing, and decorating. Be as detailed as possible to try to potentially avoid unexpected expenditures.
Do you hire an outside company to decorate your home or cater your annual holiday party? Include these costs in your budget. If you travel for the holidays, remember to account for gas, hotels, and airfare.
Next, make a list of everyone you are buying for. Looking back at last year’s financial statements will also be helpful here. Are you adding (or omitting) someone from your gift list? Adjust your gift budget accordingly.
Don’t forget to include gifts for the people you want to show appreciation for at the end of the year, from your postal carrier and cleaning service to your hairdresser and landscaper.
If charitable giving is an annual tradition, include these donations in your holiday budget as well.
3. Decide How to Cover Holiday Expenses
How are you going to pay for holiday expenses? You have a few options. The most obvious is to pay these costs out of your monthly income, tapping into savings if needed. If you do, be sure to replenish these funds in the future.
If you have credit cards with rewards, consider using them for holiday spending to earn points towards cash back, airline miles, and other rewards. Pay off monthly balances to avoid interest charges and minimize unnecessary debt. Don’t forget to review which of your credit cards give more points for the type of purchases you are making to maximize rewards.
It can be helpful to discuss high-dollar purchases like luxury gifts or vacations with your EP Wealth financial planner to learn the pros and cons of different payment options based on your situation.
4. Track Your Spending
As you start holiday shopping, track your spending as you go. Save receipts and compare them to your holiday budget to see where you overspent or spent less than anticipated. This way, you can prepare for the next holiday season.
Print out credit card statements, bank statements, and other documents and store them somewhere handy to revisit this time next year. Being mindful about how and what you spend positions you to remain aligned with your short and long-term goals.
5. Check In With Your Financial Planner
The holiday season is ideal for meeting with your EP Wealth advisor to plan for the year ahead. During your annual financial review, you will discuss any major life changes that occurred during the year, like a new job, child, partner, or business venture, and how they impacted your finances.
With insight and support from EP Wealth, you can manage your spending this holiday season and look forward to a rewarding year ahead. Contact EP Wealth to work with a financial planner near you.
DISCLOSURES:
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.