If you’re like many people, you’re watching your dollars extra carefully this year as you do your holiday shopping. And that’s a good thing, because even in the best of times, it’s never wise to go overboard on gifts. But by making the right moves during this holiday season, you can also help ensure that you stay on track toward your long-term financial goals.
Specifically, what steps should you be taking during these weeks? Here are a few suggestions:
• Avoid racking up big debts. In a time of economic uncertainty, the last thing you want is to take on a new debt load. Everyone in your life who is important enough to receive a gift from you will understand if you don’t splurge on presents you can’t afford. And winter can be pretty gloomy when you’re trying to pay off big credit card bills from the past holiday season.
• Establish a gift fund. For next year’s gift-giving season, you may want to open a special “gift fund.” Of course, it’s not easy for any of us to find “extra” money after we’re done paying our bills, so the best way to set up your gift fund may be to have the money moved automatically each month from your checking or savings account to another liquid account — one that you wouldn’t normally touch for your day-to-day expenses. Even if you can only afford to put in a small amount each month, you might be surprised at how much you’ll accumulate in a year.
• Don’t touch long-term investments to pay for gifts. Some people tap into their long-term investments to pay for holiday gifts, telling themselves they’ll re-fund the investment when they “get caught up” — but that rarely happens. In fact, once you cash out part of an investment to pay for a gift or an everyday expense, you’ll set yourself back in your pursuit of your financial objectives — so do whatever you can to help preserve those investments. Apart from setting up a gift fund, you’ll also want to make sure you have a reasonable amount of “cash” and cash equivalents in your investment portfolio.
• Protect yourself from identity theft. Victims of identity theft can testify that it’s an enormous — and possibly expensive — hassle. Unfortunately, identity theft seems to go up during the holiday season, so take steps to protect yourself. When you go out shopping, just take one debit or credit card with you — and look around whenever you use it. Identity thieves have been known to copy down credit card numbers and even photograph credit cards with cell phones. Also, if you’re shopping online, make sure you’re on a secure web site. One way to check for a secure site is to look for “https” in the Web address, along with the icon of the locked padlock on your browser’s status bar.
• Shop early for bargains. As you probably know, some of the best bargains come during stores’ “after-holiday” sales. By taking advantage of these sales, you can stock up on gifts for the next holiday season.
By following these suggestions, you may be able to remove a lot of the financial stress that often accompanies the holidays — and that, by itself, can help you enjoy the season even more.
Cardella is a financial advisor with Edwards Jones in Hinesville