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Pacific Northwest Bankers Association Presents “The Financial Edge”Holiday Spending Tips: How To Avoid The Financial Holiday HangoverBy Pamela FowlkesPNBA Board Member The holiday season should be a joyful time focusing on family and celebrations. Instead, many people find the holidays stressful because of extravagant expenses on gifts and travel. Holiday spending and gift- giving can spark financial fear. A lack of planning causes impulse spending, overspending, and a significant increase in debt. A holiday spending plan will give you the flexibility to enjoy the season without having to worry about paying off the debts once the holiday cheer has ended. Here are a few tips to help with holiday spending: Establish a holiday budget: Decide on how much you can comfortably spend for everything, not just on the traditional gifts, but include parties, travel, tips and charitable donations. Don’t forget to include wrapping paper, postage, decorations and entertainment expenses associated with the holidays. Assign each expense a budgeted amount. Compare the total amount of expenses with what you have to spend, and adjust accordingly. By being clear and concise, you are more likely to stick with your plan. A budget only works if you stick to it! Plan ahead: One of the easiest ways to establish a holiday budget is to open a savings account early in the year and start saving a few dollars every month before the holiday season. Ask your bank or credit union to automatically transfer funds from your checking account to your holiday savings account each month. This is a practical way to save small amounts over time. The earlier you start saving the more flexibility you will have for the holidays where you can pay cash and avoid depending on credit cards and other unreliable sources. Make a gift list and stick to it: With your overall budget in mind, make a list of the people you want to buy for, what you want to buy for them and the amount you want to spend for each person. Don’t forget the babysitters, teachers, newspaper carriers, etc. Take the list with you when you go shopping and avoid impulse shopping. Stay within your spending limits. Also keep in mind that sometimes “a gift from the heart” i.e. baking or babysitting, or doing something special for someone would be an inexpensive, yet a very personal gift. Remember, it’s the thought that counts. Draw names: Many families draw names as a group and instead of buying gifts for every family member, each member buys a gift for the person whose name they’ve drawn. You may also want to designate a set dollar amount to spend on each gift. Start early: Shopping early provides several advantages. First, you can comparison shop and search for the best deals at your local stores, as well as online and catalog shopping (look for free shipping). Second, you’re less prone to impulse shopping. Third, waiting until the last days often means you can’t be as selective and you’re more likely to simply grab something out of desperation. Also, another benefit of starting early means you can avoid the hassles and stress of holiday crowds. Start late: The opposite strategy is to start late – after the holidays, when retailers hold big post-holiday sales. You may not want to do this for all of your purchases, but this is a budget saving strategy employed by many for the current holiday season, as well as for gifts for the next year. Pay with cash, a check or debit card: Only cash is as good as cash. Debit cards are a much safer option for consumers who do not want to carry cash, write a check or pay high credit card interest rates. When writing a check, make sure you have the money in your account to cover it to avoid bounced check fees. Purchases made with a debit card are withdrawn directly from your checking account, so monitor your account. Note: For goods that you purchase online, have to be delivered or may be defective, you have better consumer protection if you pay with a credit card. Remember, however, to pay this debt off immediately when the bill comes. Gift certificates or cards: A great way to manage your finances while allowing your loved ones to pick out their version of the perfect present. You can personalize the gift certificate or card by picking stores that cater to your loved ones’ interests. It will make it easier for your family or friend to buy something they will love! Keep track of your expenditures: It’s the best way to make sure you don’t exceed your limit and it will also help with planning your holiday budget for next year. Keep your receipts handy. Remember, the best gift you can give is the “gift of financial health” to yourself.Happy Holidays!Pamela Fowlkes is a Board Member of PNBA and a former Financial Counselor with BECU.The Pacific Northwest Bankers Association formally organized in Seattle in 1971 as the Washington Black Bankers Association. Subsequently, the name changed in 1975 in recognition of the role of bankers in the financial services industry, while retaining special emphasis on the career development needs of people of color in financial services industry. The Pacific Northwest Bankers Association provides a network for full communication to individuals in pursuit of new and advanced careers, education and information in the financial services industry; and acts as a liaison between the financial services industry and the community.