How To Avoid Lifeless Savings During The Holidays
By Xavier Epps, Financial Adviser and Owner of XNE Financial Advising, LLC
Have you saved specifically for this holiday season? Well, if you haven’t, there’s still a solid month available to do so before the temptation to spend hits full-throttle (if you haven’t already seen the commercials and internet ads promoting blockbuster deals on electronics, furniture, autos and more - then you’ll begin seeing them very soon).
In September’s U.S. Department of Commerce Bureau of Economic Analysis report, August Savings Rate checked in at 4.6% --- a decline of 6.1% from the 4.9% in August 2012 and 20.7% decline from the 5.8% rate in August 2011. But a recent survey shows consumers expect to spend on average only 1.9% less on gifts, décor, greeting cards and more this year than last. So we have savings falling dramatically but holiday spending slipping only a little…you must save more in order to be ahead of the game! As mentioned before, there’s still a solid month left to save for holiday purchases, be sure to do the following to limit the usage of borrowed money:
- Try and sell items you have around the house before donating them. The goal is to bring in more cash for November and December, even if an outfit is sitting in the donation pile, try to sell it first, receiving $25 in cash works out to be more than it’s donation value and the write-off received for tax purposes.
- Slash family’s entertainment and dining-out budget for November and possibly December. Yes, this will drive the kids crazy but it’s only for a few weeks, they’ll be more than happy with the gifts received than the time lost not going out.
- Are you purposely overpaying Federal and State taxes for a large refund next year? Check with a tax professional to see…in 2012, the average Federal Refund was $2,803, many grossly overpay taxes, leverage the expected refund by raising exemptions now so you can put away savings today.
When it comes to savings during the holidays, having a budget isn’t just necessary but it’s crucial and helps to avoid new debts. Once your budget has been revamped for the upcoming month(s), sit back and think about the unforeseen…think back to previous holiday’s for possible lessons to learn from. Remember, while you’re allocating more monies to savings specifically for the holiday season, remember that life continues around us, so an emergency can occur and it will put a damper on the budget if funds aren’t already available for them. Don’t forget about the holiday emergencies too! Leave cushion for the unforeseen by taking a percentage of the holiday savings each pay and placing it into an account specifically for holiday emergencies (i.e. missed gifts, extra travel tickets, unexpected guest for holiday dinners, etc…).
Be analytical this season, think of what life could be like financially going into 2014 if savings doesn’t happen today (i.e. No savings means utilization of credit and more debt going into the New Year which means less discretionary spending in the budget beginning January 2014).
Xavier Epps (Financial Adviser and Owner of XNE Financial Advising, LLC)