With holiday shopping likely starting soon (or for some already in full swing), it is a good time to check in with one of our Mabrey Bank experts on some tips to spend smartly during the Holiday Season.
We chatted with Pam Been, the Branch Manager for Mabrey’s Bixby North location on Memorial Dr. Pam has been with Mabrey Bank for more than 16 years and has worked in the banking industry for over 30 years. Needless to say, she knows a thing or two about how to be smart when managing your money.
Let’s jump right in.
1) Spending more around the holidays is often inevitable, what are some common financial issues that you see consumers run into around the holidays?
I think many consumers, including myself occasionally, are guilty of some of the same basic mistakes around the holidays. I am one that unfortunately often waits until the last minute to shop, and I miss out on potential sales. However, just because something is on sale, doesn’t mean you should necessarily purchase it. While you might be saving money on the full price of the item, don’t forget that there is a real cost to that item as well.
It’s important to always plan and set a “ceiling” for what you are willing to spend as a total over the holidays, as well as per person you are shopping for. Using too much credit to purchase gifts, or counting on a bonus that may or may not come, means that you run the risk of overspending and not being able to afford what you are actually buying. Organize in advance and make family decisions when shopping to avoid these spending pitfalls.
2) When holiday shopping, what are some ways to spend smartly and get the most bang for your buck?
You can spend smartly by shopping for sales, especially ones leading up to December. Keep a look out for the Black Friday and Cyber Monday sales following Thanksgiving. Thanks to online shopping, you don’t have to wait in line all night anymore and can take advantage of deals from the comfort of your home.
If you are extremely organized, you can also shop the “after Christmas” sales and put some inexpensive items back for the following year. It is a great time to catch small gifts, such as candles, to keep on hand for those unexpected gift needs which inevitably pop up every year.
Finally, certain credit cards will offer rewards, such as travel miles or cash back, which can be used to help offset future costs on a trip or large purchase. Spending smartly comes down to planning.
3) Obviously, getting gifts often costs money, but there are other costs associated with the holidays that can be forgotten. What are some of those “forgotten costs” that are good to remind people about this time of year and how can those be budgeted for?
I sometimes see customers who plan well for buying gifts but forget about all of the other costs that come with the Holiday Season. Consider any traveling you will be doing – airfare, lodging and gas, plus food, drinks and desserts for those holiday family get-togethers.
Holiday decorations aren’t cheap. Many choose to pay to have their homes lit up for the season – a cost that is often significant. Both real and fake Christmas trees are three figure costs, as is that nice restaurant you go to every year to celebrate the holidays.
Take a look this year at what you normally spend around the holidays, portion that amount out, and set up an AFT (Automatic Fund Transfer) with Mabrey Bank to transfer small amounts per pay period into a Savings Account based on how you budgeted. Make sure you do not allow online or ATM access to it, so that you cannot touch it easily. This will allow you to save a little bit every month without really missing it, which always make it easier to save. It will build up quicker than you think.
4) While it might be too late for some this year, what are some creative ways to make sure you are prepared for next year’s holiday season?
If you do get a year-end bonus, consider setting up a six-to-nine-month CD (Certificate of Deposit) with that bonus, so your money can earn interest. You will not only have that bonus tucked back for the next years’ expenses, but you will also have that interest as a reward for your patience.
Or, if you do get a bonus, you can use that to pay down any credit card debt you may have incurred at the holidays. Making a large payment, or paying it off entirely, will ultimately save you a lot in interest that can be spent over the holidays.
5) What are some lessons or takeaways you want people to have when it comes to spending around the holidays?
People tend to overspend because they want to give and make people, especially children, happy with gifts. Spending time with family and friends around the holidays can be just as valuable and create that sense of joy we all want to provide to others. You can also do a “theme” of handmade gifts, instead of expensive, extravagant gifts. This allows everyone to possibly showcase a talent of their own, such as art or creativity. These will be very meaningful and priceless gifts to your loved ones. It isn’t about how much money you spend; it’s about sharing experiences with those you love.
Teach your children it is better to give than receive and have them volunteer with you during the holidays, such as at a homeless shelter serving meals. They will see that not everyone receives gifts and spends money at the holidays, but they can still do something to feel good and that is rewarding to them.
In this day and time, we would all be well-served to go back to the basics of family and joy at the holidays, instead of spending so much money.