The holidays are just around the corner, which means more carefree weekend trips, adventurous vacations, and spending meaningful family time outside your daily routine.
What is it about the holidays that cause us to be more carefree with our money? No one can really say, but fun and booze is no excuse to disregard your overall financial wellness.
While financial cleaning may sound daunting, it’s just as important — if not more important — than getting your plans secured for the holidays. And you don’t need to sacrifice your holiday plans to save money, though. Renee Cohen, a financial advisor at Northwestern Mutual says that by following a few money-saving tips, it’s possible to manage your finances and still enjoy the warmer months. Here are four small, actionable spending tips she recommends to make the most of your holiday, without a crippling bill at the end.
Ahead, Cohen offers her expert guidance on everything from the importance of budgeting to how much money you should be saving and how to protect your finances.
How important is it to budget?
Too often, budgeting is considered a painful activity that can wreak havoc on your mindset. But having clarity about what’s coming in and what’s going out each month connects you to things that you truly want in life.
Managing money shouldn’t be about depriving yourself. Whether it’s a simple excel sheet or a budgeting app, benchmark your progress. Focus on expenditures that genuinely spark joy, keep an eye on accounts and get rid of any expenses that don’t add much, such as additional subscription services. Yes, the holiday season is still six months away, but that doesn’t mean you shouldn’t be thinking about it already. Think about potential plans and start setting some money aside. Whether you’re hoping to enroll kids in winter activities during their break or take a memorable vacation with the whole family, finalize your plans now so you have time to budget for the expenses.
Have goals you want to budget for? Learn Elizabeth Warren’s 50/30/20 rule — the smart way to break down your income so you don’t keep waiting to invest.
How much do I need to be saving?
There’s no particular time of the year to save, and it’s true that some things in your financial life don’t need constant check-ins. But it’s always worthwhile to verify that your overall strategy is on point. Think about having four to five buckets of savings – cash for an emergency fund (three to six months of living expenses), taxable (brokerage) and tax-deductible retirement accounts. More on what an emergency fund is and how to build yours here.
You should also be making regular contributions to a retirement plan, such as 401k or IRA year-round, especially if matched by employer contributions. You may also want to increase your savings or decide how to contribute to a traditional and Roth retirement plan. I would advise talking to a financial advisor who can help you figure out where you stand and whether you need to make any adjustments.
What are your tips when it comes to organizing finances?
While you’re on vacation or enjoying holiday activities, look at ways to make sure your finances run smoothly. With the FinTech revolution, managing your finances more efficiently is easier than ever. Setting up automatic payments is a simple way to eliminate late fees and free up time for other pursuits. The holidays can also be an excellent time to organize financial documents, like tax returns, credit card statements, and insurance policies, in a safe place. Many of us create financial goals at the beginning of the year.
Furthermore, if you have credit card balances or student loans, higher interest rates could make it more expensive to repay any debt. You already know a monster credit card bill isn’t a good thing. Carrying it over time is even worse. Cut it down quickly and aggressively. It’s wise to include an evaluation of your debt repayment plan as part of your winter financial checkup and explore ways to pay down your debt through transferring your balance(s) to a lower interest rate credit card. Alternatively, you can consolidate debt by taking out a personal loan.
Now that I’ve got my finances organized, how do I stay protected?
Keeping your family healthy and protected is the most important job as a parent. Most people are underinsured or not at all, completely compromising their financial well being. This is a great time to take inventory and review your current coverage (through employers and privately) and policies in advance to open enrollment at the end of the year. It’s essential to know your life and long-term disability coverage to determine if you’ll need additional private coverage to fit your needs.
Looking for more easy, actionable financial advice?
At Ellevest, they’re all about getting you to realize your biggest goals — whether that be planning for retirement, saving for that Aussie vacation, or starting a family. So with Ellevest, you’ll hear the phrase “goals-based investing.” Basically, what this means is that their investment objective is to help you reach your goals. That’s very different from trying to outperform some market index. Makes sense. Doesn’t it?
Need a partner to take action on these tips or want to chat with Renee for more specific advice, she’s happy to connect. Visit her website at reneecohen.nm.com.
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