• Ana Gonzalez Ribeiro

Steps to Financial Planning for the Holiday Season

Updated: Mar 7, 2019

Financial planning is not necessarily a topic we think about during the holiday season. We are all so busy going to Christmas parties and planning who to buy for and what to get. For this reason, I thought it would be a good idea to share with you the steps to take in order to plan our finances during the holiday season. After all, we all spend more during the holidays than any other time of year. So I asked Elaine King CFP®, CDFA™, President of Family and Money Matters Institute™ , author of Family and Money Matters & La Familia y el Dinero Hecho Facil, CFP Ambassador and Chairman of the Financial Planning Association of Miami Dade if she could write a piece about the key steps to take in order to plan our finances during the holidays. She kindly obliged.

Here is her contribution.

Did you know that you can save 30% on average if you plan ahead for this holiday season?  Now is the time to get started and dust off the plan you set up in January and make sure you are on target with your spending plan.

Financial planning is more than just keeping track of your money. Other areas of financial planning include education, retirement, taxes, investments, and estate planning among others.  But it all starts with a spending plan.  To get started on this first step, follow these 3 tips to stay on track for the holidays as well as for the rest of the year.

1. Create a realistic spending plan.  Before going out shopping, it is essential to have a fund designated for each activity in your spending plan.  A spending plan is a list of all of your expected outflows for the month, designated as either a variable or fixed expense. Fixed expenses are those that must be paid, holiday or no holiday,  and are the same amount each month, such as your rent or mortgage payment. A variable expense, on the other hand, is one that is not necessarily incurred each month and/or varies in amount.  Some of these variable expenses are necessary – such as utilities or transportation, while others are entirely subject to your discretion.  This last category includes your holiday spending.

The key to keeping holiday spending under control is to build these year-end expenses into your budget at the very beginning of the year, and actually fund them monthly.  The money can be moved from your checking account to a savings account or a money market, so you are not tempted to use it for other expenses during the year. A good practice to keep you motivated and on track to having the holiday money when you need it is to use online tools such as Mint, Doughhound or Yodlee.

2. Share your spending plan with the family. Most of the commercials, ads and marketing campaigns developed for the holiday season are targeted to children and families.  They are attractively designed, promoting “must have” products and experiences for the holidays.  It is imperative that you take the time to share with your children the value of money and giving, but also discuss what is appropriate and affordable for your family. Consider empowering your children by designating an amount in your spending plan that is for them to use (and keep within this plan!) as they do their own shopping.  Have them participate in financial decisions about entertaining.  For example, you could set aside $50 for a small gathering at your house, and have the children share in the task of buying food and supplies at the supermarket.  You might reward them if they find ways to spend less than the budgeted amount, such as putting the savings in their own accounts.  It’s so important to get children involved in financial management, and empowered to take control of finances.

3. Stay away from credit card debt.  Equally important is to avoid using your credit card to buy more than you can currently afford.  You should also limit the number of credit cards that you hold. Consider that a debt of $1,000 at a 19% APR where you only pay the monthly minimum will take 20 years to pay off the balance.   Debt is not always bad, however.  Debt that is used to finance items that appreciate over time such as a college education, or a business start-up, are effective uses of leverage.  On the other hand, using debt to purchase something that depreciates in value or has only short-term benefits, such as clothing or entertainment, is bad debt.   During the holiday season, our generosity and holiday spirit can sometimes lead us into bad debt that lingers long after the festivities have ended.

In the past few years, the year-end has brought feelings of anxiety and loss due to economic, political, and social turmoil.  However, we all want to close the year on a positive note, creating a culture of responsible finance despite the affairs of the nation.  Consider giving donations in the name of a family member or friend rather than buying the person a store gift. Consider hosting events and asking your guests to bring a toy for a shelter, or contributing to someone’s education fund.  A Certified Financial Planner professional can help you with your seasonal planning and budgeting and give you more control of your finances which will allow you to enjoy the season and relax.

Copyright Notice

© 2010, Ana Gonzalez Ribeiro


Disclaimer: The information contained on this site is intended for educational purposes only and is not a substitute for advice, diagnosis or treatment by a licensed physician. You should seek prompt medical care for any health issues and consult your doctor before taking dietary supplements or making any major dietary changes.

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