We don’t even want to say the “B” word when it comes to holiday spending, but it’s time to talk budgets. Our financial expert John Fawaz joins explains where we begin budget wise this holiday season.
Have a list and set limits: List the people you going to buy a gift and set amount you like to spend. Having a budget comes in handy here. The idea here is to a have a plan. We tend to spend a lot more when we go grocery shopping without a list.
Avoid Credit Cards: Unless you can pay off end of the month. Stores tempt people to open store credit cards when you are checking out and offer 10-30% discount. The problem most people end up carrying a balance and end up paying a high finance charge. If you have $1000 in Credit Card debt at 20% interest you are paying $1000 in interest every 3.6 years. Additionally with perceived discount most people end up spending more.
Pay cash or use debit cards: The psychology of spending, you tend to spend less if you use cash or use debit cards where money is deducted from your checking account. Another option is using a prepaid credit card. Basically, you go to a bank or credit union or even a retail store and load up a credit card with amount of money you going to spend. It helps you stay within budget and provides convenience.
Set up a college Fund: If you have children this is great idea. Kids get overwhelmed with gifts and toys they don’t need. Have in laws and grandparents limit the number of toys and gifts they buy. Instead let them know you have a college fund set up if would like to contribute.