How a Budget Can Make or Break Your Holiday (and Your Future)

By Alex Fishman - December 20, 2018

The end of the holiday season may not seem like the right time to talk about your finances. But how you manage your holiday expenses this year can be a window into how you manage your overall financial plan.

The 2018 Holiday Outlook  from PricewaterhouseCoopers LLC's latest survey1 reported that consumers will spend 5 percent more this holiday season than last year. Tack that bill onto routine monthly expenses and the extra costs that always come at year-end (such as property taxes), and your finances could have a shaky start to 2019.

Track this Year's Holiday Spending

Even if you don't usually budget for the holidays, start tracking your spending while it's still fresh in your mind. As you wrap up your purchases, the extra oversight might help you avoid loading up credit cards or dipping into your investments.

When you're done with your gift giving, entertaining and holiday-related traveling, take the time to record and evaluate your spending, even if it's just an estimate. Was it too much? Will it affect any planned purchases or regular expenses in 2019? How about your existing saving and investing plan? Would you have done anything differently?

Then, consider how a budget—for the 2019 holidays and your 2019 finances—might give you a different perspective on your spending for the coming year.

Budget = Financial Control

Budgeting is the foundation for financial planning. Think about it: It's the primary way you can affect your own financial success. You can't control the financial markets, but you do control how much you spend, and how much you save.

Each dollar you save today has the chance to grow and compound over time. We're not suggesting canceling your gift-giving traditions! A gift here and there won't make much of a difference, just like daily fluctuations in the financial markets won't ruin your future.

But your total spending and saving patterns will set you up for financial success—or financial stress.

How a Budget Supports Your Financial Goals

First, it's important to know what you're budgeting for—short-term goals like holiday spending or far-off goals like retirement or college. Our Future Value Calculator can help you determine how much to set aside for a long-term goal, and the Planning for Your Retirement tool dives into more specifics as you approach retirement.

1. Budget

Armed with a clear vision of your goals and an estimate of the amount you'll need, examine your everyday finances.

  • List your sources of income, and subtract basic living expenses and debt payments.
  • Compare what's left with the amount you've calculated for your goals.
  • Evaluate how much you want to use for discretionary spending versus saving it for your future.

2. Save

We generally believe clients should have three to six months' worth of emergency savings in a bank account or other relatively low-risk account. There are a number of ways to boost your emergency fund.

  • Take steps to curb spending on nonessentials.
  • Switch to cash for certain expenses to avoid the temptation of credit cards.
  • Pay off debt to ensure more of your money goes to you rather than interest payments.

3. Invest

Investing, rather than saving, has the potential to grow your money over time, at a greater rate than a bank savings account. But it also involves the risk that your investments will decrease in value during market fluctuations.

  • Take advantage of your employer's retirement plan, including any matching contributions.
  • Consider automatic investments in other accounts. Small amounts each month can add up during your lifetime.
  • Consult a trusted financial advisor (or use our Investment Planner tool) to find the right investment options for your goals, time frame and tolerance for risk.

This Year, Give Yourself the Gift of a Budget

Need help getting started? Contact us, or find out more about investing for any goal.

For more in-depth portfolio reviews and wealth management services, our Private Client Group offers exclusive access to customized advice and a dedicated service team.

1 As of December 2018. 

The results of the Investment Planner tool are based solely on the information you provided in response to the questions. The results are limited to an asset allocation model and a mutual fund that are suitable for your investing profile and risk tolerance. The results do not account for additional investments you may currently own. As your financial circumstances or goals change, you should update the information in the Investment Planner tool. In applying the results to your situation, you should consider any potential tax implications.

Alex Fishman
Alex Fishman

Give Yourself the Gift of a Budget

We can help you get started. Contact us to find out more about budgeting and investing for any goal.

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