NJ financial advisor’s tips for saving big bucks this holiday season
Creating a holiday on a budget. This is always a tricky one year after year. For many New Jerseyans and consumers nationwide, gift buying and holiday planning may be even tougher as many items are more expensive, thanks to inflation.
But there are still many ways to cut corners and still show the loved ones in your life a beautiful, memorable holiday.
How can New Jerseyans save money this Christmas?
First and foremost to keep in mind is, “things you buy depreciate over time but memories you create appreciate over time,” said Ken Kamen, president of Mercadien Asset Management based in Hamilton.
Buy experiences instead of material things. It could also be a lot more cost-effective to invite people over to your house for a party instead of buying individual gifts for this guest list. Give people the gift of your time, he said.
Most likely guests will be talking about the party for years to come, rather than the tie or bottle of cologne that was given to them.
“I don’t want to host a party. I want to buy gifts for everyone!”
Of course, there is plenty of people who like to be “Santa Claus,” buying gifts for everyone in their family, friends, neighbors, and co-workers.
In this case, Kamen said to create a list before the shopping starts. The list should include the names of the giftees, but most importantly, the budget for each person.
“Make a list. Put down a dollar amount. If you want to spend more on one person, look down the list and see whom you can save a little bit on. It’s old advice but it’s tried and true,” he said.
Should I pay in cash or with a credit card?
It’s very easy when shopping for scores of people during the holidays to whip out the plastic and throw everything on a credit card, then worry about the bill later. But this could get you into a lot of trouble, Kamen said.
“Delayed pain is increased pain,” he said.
One of the best things to do is to find ways to pay for gifts more immediately either through checks, debit, or cash so you see your balance going down in real-time, Kamen suggested.
Where can people cut corners to free up more money for gifts?
It’s not just gift shopping that is the only expense during the holidays. There’s the decorating, the cards, and the food to name a few. All of this can add up, possibly taking funds away from the shopping experience.
Think about cutting some corners. Maybe don’t send out holiday cards this year.
“I always like to say give things in a brown paper bag and draw a little smiley face on it because gift wrapping adds a substantial amount to the budget when you see how much all the gift wrapping costs,” Kamen said.
He also suggested that if you are going to buy a lot of gifts, then skip hosting a party this year. Back off on the entertaining budget to put a few more bucks back into your pocket.
When it comes to buying electronics as gifts, Kamen suggested buying last year’s model because every time someone buys the new version, there are only minor tweaks between the last model and the new one. So, think about buying the older model. That will save some money, as well.
Avoid last-minute shopping. Kamen said that is the worst thing you can do if you’re trying to stick to a budget and save money. When you’re frenzied and overwhelmed and you just need to buy a gift for someone like Aunt Sally, you wind up overspending on an item just to get out of the store.
Keep in mind that when you spend money, you’re taking on an obligation to pay which is going to crowd out something else you can’t pay for later on, Kamen said. That is something to keep in the back of your mind when you’re going Christmas shopping.
How am I going to pay off the credit card bill?
The holidays have come and gone. You ate, you drank, you laughed, you were merry and Santa was good to everyone.
Now, it’s January, and here comes the bill that needs to be paid for all that December merriment.
Kamen said before January creeps up on you, start saving early so you have the funds to pay it off. Saving money, creating a budget based on that saved money, and sticking to that budget is the most desirable option, he added.
Keep in mind that if you do charge, there are high rates on interest rate credit cards.
“That gift that you bought now for $100, at a 20 percent interest rate, if you don’t pay it off it’s $120, $150 year by year if you let that balance increase,” Kamen said.
Always try to pay off more than the minimum balance every month, he said. If you’re in a situation where you’re not paying off the full balance on your credit cards now, the second you buy something, it’s starting to charge interest from the day you buy it.
“That would be a good gut check on whether you should be spending a lot of money on gifts,” Kamen said.
In the end, he said to remember when money is an issue, the more you spend on others in December means the less you have to spend on yourself in January and beyond.