Financial Advice

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Enjoy Your Holidays by Building a Budget


We’re here today with our financial experts from UFCU, please welcome UFCU Financial Health Program Manager Monica Munoz Andry.

Today, Monica is here to talk to us about Holiday Spending and Saving Tips!

So, tell us, how do you avoid overspending during the Holidays?

Start by writing down a realistic dollar amount of how much you can spend on all your holiday purchases and activities. Deciding on a budget amount that is comfortable for your pocket and won’t ‘break the bank’ so to speak goes a long way in avoiding overspending or any guilt about purchases.

Make a list of everything you usually buy, from gifts to food to entertainment to travel expenses, and tally up the costs.

Set limits — Not many of us can afford to shop without keeping our bank accounts in mind, so avoid getting carried away. Make a list of gift recipients and decide how much you want to spend on each person. Having a fixed amount in mind will help you avoid overspending.

Gifts don’t have to be monetary. COVID has caused many hardships, and you can agree with your family and or friends that a heartfelt letter or call, a special favorite dessert, or the gift of time is what will warm their heart.

Great. Now that we have a plan, what’s the best way to shop?

If you plan on shopping, online or in person, be prepared for the sales pitches and avoid getting caught up in the sales holiday craze. Online retailers and stores will entice you to buy, buy, buy with never-before-seen deals and discounts.

Keep your list and limits top of mind, so you can resist the temptation to overspend or buy a random item that catches your eye.

A good tip is to print your list and budget or have it handy on your phone or computer so you can double-check your spending as you go.

Be an educated consumer — comparison shopping goes a long way in stretching your holiday funds further. Fight the urge to get your shopping over quickly. Take your time to do some online research, especially on large ticket items — many stores have rebates, price matching, and specials.

What’s the best way to pay — should we use cash or credit?

Cash is king — studies have found that people spend 12%-18% more when using credit cards than when using cash.

Shopping with cash instead of credit or a debit card forces you to budget and makes overspending more obvious. For online purchases, use your debit card so you can see the immediate impact to your checking account.

Beware: the 20%-40% off offers from retailers when you apply for a store credit card may sound nice, but not only can they lull you into spending more than if it was cash, they can hurt your credit score.

If you sign up for every credit card offer in order to get a discount, you could negatively impact your credit score because of the number of inquiries on your credit in a short amount of time.

You also want to make sure that if you are using credit, you use a card with the lowest rate if you are going to carry the balance for several months. Department store credit cards usually have higher interest rates so be mindful of those details.

Again, we’re thrilled to have UFCU representative Monica share financial advice with us, regarding holiday spending best practices.