A recent LendingTree survey found nearly half of the 2,000 consumers surveyed are dreading the holidays due to the financial costs. This type of sentiment increases among women, especially as moms are more likely to buy gifts for the family than dads. But there are ways to reduce the financial stress of the holidays, save money and purchase gifts that promote financial wellness for everyone.
A good place to start is creating a budget for all your holiday expenses such as gifts, gas, food, decor, holiday cards and travel. Include a predetermined monetary amount in your budget for each person on your
gift-giving list, but leave room for unexpected costs.
Sticking to a budget will prevent you from spending more than you can afford. Seek out an accountability partner and help each other succeed.
Consider using a cashback credit card or similar rewards offer, but only if you can use credit responsibly and pay off the balance in full. Credit cards might provide fraud protections not available with debit cards, but monitor your bank statements and report suspicious activity immediately.
If using credit cards is a struggle, consider using cash for all purchases. Establish a savings account designated specifically for the holiday season using automated deposits to fund the account. You may also want to consider a prepaid card to help you stick to your budget.
If you must borrow money during the holidays, check with your financial institution to see if they offer “holiday loans.” These loans are usually limited in loan amount and offer competitive interest or lower-than-market interest rates.
When shopping, watch for sales and map out your shopping experience to minimize unplanned purchases. When shopping online, make certain you trust the seller and understand what you’re buying. Beware of scams used to prey on unsuspecting online shoppers. Understanding the required return and cancellation policy also is important for any purchase.
Protect yourself and your money by keeping your phone or computer updated and having unique usernames and passwords for each site. Avoid using free wifi and unsecured connections to make financial transactions. Beware of phishing, which is when scammers send an email that appears to be from a legitimate company attempting to obtain your personal information. If you receive an email from a retailer with a special sale offer, go to a new browser and type in the website URL to guarantee you are visiting the correct site. To detect a likely scam, watch for grammatical errors, misspelled or extra words, or numbers in a web address.
If you need ideas this year, consider these financial wellness gifts:
• Donate to the person’s favorite charity and inquire with your tax advisor if the donation is tax-deductible. Be wary of unsolicited charity requests using sound-alike names or claiming connections to well-known charities or causes.
• Contribute to a 529 plan to save and pay for education expenses.
• Contribute to the IRA of an eligible person with earned income.
• Give the gift of cash and provide ideas on how to grow the money in a CD or investment account.
• Pay for a visit to a licensed financial advisor for financial goal consultation.
• Give the gift of financial learning with a book about finances.
• Purchase a savings bond as a gift.
• Make homemade gifts yourself or focus on creating memories rather than physical items.
Following these tips and learning more by utilizing free resources like Save4Later and SmartHER Money could lead to giving yourself the gift of saving money. Your savings could be reinvested in an IRA, emergency fund, or holiday savings account for next year.
Katie Averill is the superintendent of the Iowa Division of Credit Unions.