Planning for the Holidays


The holidays can be a magical time of year, filled with the warmth of family and friends and the joy of giving—or receiving—the perfect gift. But if you’re not careful, the holidays can also be a financial drain—leaving bills that linger long after spring has returned.

The key to managing holiday spending is to treat it as you would any other financial goal: plan, budget, and save.

Start With Savings

Not having enough money during the holidays can make you reach for your credit card, adding interest payments to your holiday expenses if you can’t pay the bills off in January. Remember, even a low interest rate adds to the cost of every purchase you make and could negate any bargains you found.

To avoid credit card use, set aside a little money from each paycheck in a special account reserved for holiday expenses. If you start early in the year, saving just $10 a week will give you a nearly $500 head start when December rolls around. The later you start, the more you’ll want to set aside. Check with your bank or credit union to see if they offer special holiday savings accounts, or consider a direct deposit from your paycheck. If you never see the money, you’re less likely to miss it.

Build a Budget

With a savings plan underway, your next step is to plan for holiday expenses by setting a holiday budget. In addition to gifts, don’t forget about things like meals out, decorations, and travel. If you still have receipts from last December, you can use them to help plan the coming year’s expenses.

Your goal should be to bring your holiday budget in line with what you have set aside by the start of the holidays. If you find a sizable gap between savings and expenses, try to find ways to reduce costs or save more. Bringing your lunch to work is an excellent way to free up money for savings. Also examine your gift list and non-gift expenses. Do you really need to buy more Christmas lights? Can you eat fewer meals out during the holidays?

Cutting Back on Spending

Last-minute shopping is the easiest way to wind up in debt during the holidays. You can begin to reduce holiday expenses by starting your shopping for next year as soon as the holiday season winds down. Post-holiday sales offer deep discounts on wrapping paper, cards, and decorations.

You can also look for bargains online. Many online retailers offer lower prices than their brick-and-mortar counterparts. Just make sure you can pay the bill before submitting your credit card number. But don’t assume that you’ll always get a better deal online. Compare online prices with those of local retailers to make sure you’re getting a bargain — and don’t forget to include the price of shipping in your overall cost.

Gift Giving Alternatives

Creativity is a key ally in managing holiday expenses. One of the easiest ways to reduce gift costs is to give the gift of time. Homemade coupons for a home-cooked meal, an afternoon at the beach, or a pledge to mow the lawn, paint or clean the house, or babysit can be just as valuable as store-bought items. Busy moms and dads can offer coupons promising to take a day off to spend with the kids or to take them to a special place or event.

If you have a lot of people on your gift list, consider a holiday grab. Similar to the office grab, everyone picks a name of someone to buy for, reducing the number of gifts each person has to buy while making sure that no one is forgotten. Buying after the holidays can also work to your advantage. If there are people on your gift list you know you won’t see until after the holidays, postpone your shopping to take advantage of those late-December discounts.

It’s better to give than to receive, especially when you get a tax break. Generous-minded people on your list may be happy with a charitable donation made in their name, and you can potentially pocket a tax deduction.

Planning, budgeting, and creativity can help keep holiday bills in check—and keep you from reaching for credit cards. If you must use credit to balance the holiday budget, use the card with the lowest interest rate and work to pay down the balance as soon as possible after the holidays. The holiday season is more joyous when you’re not still paying for it when summer arrives.




Michele Bjorkgren, Financial Advisor
Compass Financial
p. 515.327.1020 x13
Securities Offered through LPL Financial


A little more about us:
Compass Financial is an independent, fee-based financial advisory firm in West Des Moines, Iowa. The Compass Team helps individuals and families develop an inspiring vision of their financial future and a realistic strategy.

By listening closely to our clients’ true needs, wants, hopes, desires and dreams we are able to combine Wealth Management and broad Financial Planning customized to each individual situation. It’s our goal to assist you in developing a personalized financial road map. The results from the process should include confidence that comes from planning. As we all know, life happens, sometimes ambushing the best laid plans. Accepting a new reality and adapting the financial plan is work we have done many times for our clients.

We also offer Financial Check Up or Second Opinion Services to those who want to enhance the service they are already receiving. This should lead to a better understanding of your current plans and give added confidence to your existing advisor relationship.

Sometimes life’s biggest challenges come in the form of transitions, retirement, marriage, health issues, divorce, unexpected loss, or even college savings. Our team at Compass has experienced many of these life transitions, it’s our hope to come alongside you and your family. These defining moments of life provide opportunities to implement financial strategies that can have long lasting impact. The first step is always the most difficult, but can also be the most rewarding. Please Contact Us today to receive your free, no obligation, one hour initial consultation!

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