Tips for Holiday Spending

During the holidays, it is easy to get caught up in the joy of giving and all of the hype surrounding days like Black Friday. Unfortunately, too many people end up spending more than they can afford or running up the balances on their credit cards causing them to pay for the gifts they purchased long after they are given. 

There are ways to save during this time of year. Making a budget for the holidays including all holiday expenses such as gifts, holiday entertaining, holiday cards, postage, and travel expenses is the first step. If this budget is made early in the year, then possibly a small amount can be set aside each month to avoid future credit card use.

Planning ahead and shopping throughout the year can be helpful, as well. Keeping a list of possible gifts can allow time to look for sales because the holidays are not always the best time of year to buy certain items.

Also, waiting until the last minute to buy can cause someone to spend more than expected because there is so much more pressure to just get it all done.

Bankrate.com posted an article titled, 18 ways to save money during the holidays, and their suggestions include making homemade gifts and offering to do needed things for people like dog walking instead of purchasing presents. Many times these types of gifts will be much more appreciated.

In addition, Bankrate.com suggests sending e-cards this year instead of having to pay for postage. E-cards are sometimes free or are offered at a relatively low price. Many e-cards can be personalized with family photos and sometimes even set to music.

Another important tip from Bankrate.com that may help people stick to a budget is to take out the amount available to spend on the holidays in cash and when it is gone, spend no more. This suggestion may cause people to be more frugal and their money may stretch farther than they think.

Going into debt for the holidays will cause more stress and cause the time spent with family to be less enjoyable. It could make the rest of the year even more stressful, as well. Remember to focus on making the time spent with family and friends happy and memorable instead.

Kids and Finances (Part 2)

As children age, the lessons they should be taught about finances become more complicated. Many adults could use some education, as well, since money is not necessarily something their parents discussed with them. Parents should start age-appropriate dialogues with children about being financially responsible as young as 3 years old.

The President's Advisory Council on Financial Capability (PACFC) developed a website named Money as You Grow. The site provides 20 essential, age-appropriate financial lessons and includes corresponding activities for each age. One of the main objectives of the PACFC is to find ways to improve the financial capability of younger Americans.

Last week, a summary of what 3-13 year old children should be taught was provided. Some of the lessons for 14 year old children and up are below:

14-18 YEARS OLD

• When comparing colleges, be sure to consider how much each school will cost.
• Avoid using credit cards to purchase things that cannot be afforded with cash.
• Money is taken out of paychecks for taxes, so they may appear smaller than expected.
• Save and invest money in investments like a Roth IRA.

18 YEARS OLD and up

• Credit cards should only be used IF they can be paid in full each month.
• Health insurance is a necessity.
• Save at least 3 months of living expenses in case of an emergency.
• When investing, consider the risks and annual expenses.

These are important lessons for everyone. The earlier people are taught about how money works, the better chance they will have for a healthier financial future.

The President's Advisory Council on Financial Capability (PACFC) was created by an Executive Order that was signed on January 29, 2010. The purpose of the website is to inspire families, community organizations, nonprofits, and businesses to embrace Money as You Grow as a tool to promote financial literacy. The website serves as a guide to learning about and using Money as You Grow. It is intended for reference only, and is not meant to endorse or promote specific initiatives.

Kids and Finances (Part 1)

The holidays are a good reminder that children need to learn the value of money. Kids can be taught age-appropriate lessons at a very young age regarding money and how it is used in the 21st century.

These days, children might rarely see cash exchange hands or they might believe getting money is as easy as driving up to the ATM. Children need to be taught to be financially responsible, so they can carry that knowledge with them the rest of their lives.

The President's Advisory Council on Financial Capability (PACFC) developed a website named Money as You Grow. The site provides 20 essential, age-appropriate financial lessons and includes corresponding activities for each age. One of the main objectives of the PACFC is to find ways to improve the financial capability of younger Americans.

Some of the lessons for 3-13 year old children are provided below:

3-5 YEARS OLD

• Money is needed to buy things.
• Money is earned by working.
• It may be necessary to wait before buying something.
• There is a difference between needs and wants.

6-10 YEARS OLD

• Choices need to be made about how to spend money.
• It is good to shop around and compare prices before purchasing.
• It can be costly and dangerous to share information online.
• Putting money in a savings account will protect it and pay interest.

11-13 YEARS OLD

• Save at least a dime for every dollar received.
• Someone could steal personal information, like a bank or credit card number, if it is entered online.
• The sooner money is saved, the faster it can grow from compound interest.
• Using a credit card is like taking out a loan; if the bill is not paid in full each month, interest will be charged and the amount owed will increase.

Check back next week to learn important financial lessons for older children.

The President's Advisory Council on Financial Capability (PACFC) was created by an Executive Order that was signed on January 29, 2010. The purpose of the website is to inspire families, community organizations, nonprofits, and businesses to embrace Money as You Grow as a tool to promote financial literacy. The website serves as a guide to learning about and using Money as You Grow. It is intended for reference only, and is not meant to endorse or promote specific initiatives.

Headed for Financial Trouble?

Many people simply do not face the fact that they are in trouble financially before it is too late. In order to have more stable financial futures, individuals need to take a good look at their current financial health. It is important to look for “red flags” to determine if financial problems are around the corner.

Some who are heading down the wrong financial path may do things like pay only the minimum amount due on their credit cards or maintain balances that are near or at the limit. In addition, they may rack up late payment fees due to not having enough money to pay bills on time.

Frequently having to transfer credit card balances to new cards may also indicate someone is having money issues.

Many people with financial trouble looming have little or no savings or emergency funds available.

Withdrawing money from retirement accounts or investments to cover day-to-day expenses can indicate someone is in trouble financially, as well. That is money that they may never recover and can pay high taxes on for early withdrawals.

Financial troubles are certainly very stressful and can be hard to face, but avoiding them just exacerbates the problem. Taking control now by looking for potential financial “red flags” can keep someone out of future financial trouble.

People who recognize some of the above financial behaviors should start working on prioritizing their financial needs and goals and look for resources available to get back on track.

There could be options for someone who needs help and the sooner the issues are dealt with, normally the better the outcome. Many times it just takes changing financial habits and cutting spending, but there are also other options like negotiating with creditors or bankruptcy to consider for some.

To gain an even better understanding of potential financial issues, individuals can go to the National Foundation for Credit Counseling’s website at: http://nfcc.org/. The NFCC’s mission is to promote the national agenda for financially responsible behavior and build capacity for its members to deliver the highest quality financial education and counseling services.