If you’re drawing up your holiday list, ready to embrace the coming season — you might want to get smart with your money first.
Many people plan and hope that if they start early, then they won’t have to make any cutbacks because before the holiday comes around, most of the items on their lists will already be secured.
This is a good plan, and one of the smartest money moves you can make ahead of the holiday season to avoid overspending and financial stress, according to Mafe Aclado, finance expert and general manager of Coupon Snake. However, there are additional money moves you should make ahead of the holiday.
Set A Budget
When it comes to being holiday savvy, Aclado advised setting a budget as the first practical thing to do.
“First of all begin by making a list of all that would be costing you money during the holiday season, and then allocate funds to each of the items on your list. Then separate the items that are needed from those you can do without, then start saving up.”
She said the holiday season and impulsive spending are almost synonymous.
“Without taking extra care to ensure your finances, chances are that you would run up so many expenses that would significantly hinder your financial progress, leaving you with a pile of debt to deal with after the holiday season.”
Nischay Rawal, CPA and founder of NR Tax & Consulting agreed that setting a clear holiday budget early on and sticking to it by using budgeting apps that categorize expenses, allow for real-time tracking and adjustments.
He said this can be especially helpful for business owners.
“This approach helped a small business client avoid overspending last year, freeing up funds for a charitable donation, which also yielded tax benefits.”
Make Sure Your Investments Align With Your Goals
Aclado explained that one crucial money move to start making now ahead of the holiday season is to ensure that your investments align with your long-term financial goals.
“This way, not only would you be avoiding the temptations of emotional spending but you would also be ensuring that your financial goals continue to progress.”
You would also enjoy the peace of mind and confidence that comes with knowing that you are still on track in pursuit of your financial goals.
Stay On Top Of Debt
Debt management is yet another way to financially prepare for the holiday season, according to Aclado.
“Strategically reduce your debt load before the holiday season approaches. Pay more focused attention to high-interest debts.”
This way, she explained, your improved financial state would help keep you in check and help you resist the urge to go on a spending spree when the holiday season comes.
Review Year-End Tax Strategies
“Another effective tactic I recommend is to review year-end tax strategies before the holiday rush,” said Rawal.
By strategically timing charitable donations or business purchases, he said people can maximize deductions and improve their financial position before year-end audits.
“For example, I assisted a local startup in purchasing essential office equipment in December, which reduced their taxable income and improved their cash flow, giving them more financial room to enjoy the holidays.”