It’s back-to-school season, but that doesn’t mean you need to break your budget. Here’s six...
Keeping Seasonal Financial Stress Down
According to a T. Rowe Price survey, more than 50% of parents will aim to get everything on their kids’ wish lists this year. Many of these parents will be paying for these gifts for months, or even years, afterward.
There’s a better way, and it’s simple: Create a budget, and make informed decisions about your spending before you hit the shops.
Short-term effects
Tipping your budget just a bit every once in a while isn’t a disaster. But the spending hangover many parents face after holiday shopping is too large to be easily forgotten.
Over half the parents surveyed will pay for their holiday gifts with credit cards. Just 61% of them plan to pay off their spending within three months, and 16% say they will pay it off over the course of six months or more. That’s half a year spent catching up on holiday spending!
Think carefully this shopping season before you drop another item into your cart. Is this gift really worth trimming your budget for the next three — or six — months?
Long-lasting effects
Eleven percent of parents use money from their retirement accounts, 14% have taken funds out of their emergency savings and 11% have taken out a payday loan.
While their kids may be delighted with their loot, parents can be paying for it for longer than they think.
Taking $500 out of a 401(k) at age 35 translates into giving up $6,000 that was earmarked for retirement. Parents are forking out additional taxes and penalties to gain access to the money, and are also losing the opportunity for that money to grow.
Life Lessons
There’s nothing quite as exciting as unwrapping a present. Kids wait all year for the holidays, and as their parents, you want to make them happy. This is why 60% of the parents surveyed claimed they try to check off every single item on their child’s wish list.
Aside from the financial drain, purchasing every gift your kids have their hearts set on teaches them a host of lessons they’re better off without. Do you really want your kids thinking they can always have everything they want? Do you want them to feel that everything they own must always be the best and most expensive?
This holiday season, teach your kids that true happiness can’t be bought.
Be proactive
Try saving up for the holiday season throughout the year. While it may be too late for this year, it’s never too early to start thinking about next season. Sign up for our holiday club accounts, and put money aside each month!
Be an informed shopper this holiday season, and your decisions will pay off in more ways than one.
MSCU is here to help you save this holiday season, reach out to one of our FIT coach and learn tips and tricks to create a secure financial future.
Your Turn: How will you fund your holiday spending? Do you plan to buy your kids everything on their lists? Why or why not?
