Sound Holiday Spending Starts With a Plan
Before heading into the throng of Holiday shoppers, it’s wise to have a plan. That's the recommendation of Jennifer Doom, Public Information Officer with the Kentucky Department of Financial Institutions. Doom suggests mapping out a gift buying budget and strategy for the entire month of December.
“We have some tips on just to spend money a little bit smarter this holiday season, to perhaps have a plan. You are less likely to fall into financial woes or trouble if you have a plan and stick to it. And it kind makes the season a little more pleasant,” said Doom.
Doom says a rule of thumb is to limit spending to one and a half percent of your total household income. So, for a family earning 50 thousand dollars, holiday spending could be in the range of 750 to 800 dollars. Doom suggests paying in cash whenever possible, even if it means dividing up money for gifts into different envelopes for family and friends.
While using credit cards can make holiday shopping seem easy, a consumers need to be aware of the ultimate cost of their purchases. Doom says charging as little as 800 dollars for gifts can mean minimum payments for three years.
“Every time you do change your credit, you open a credit card, you close a credit card, it does affect your credit report. So choose your credit wisely. Make sure that you have cards that you know what your balances are, that what you put on them, you can pay off at the end of the month, so you aren’t running up your credit,” added Doom.
Doom says young children should be taught the value of saving. To set an example, she takes her young nephews to the dollar store on occasion. While she might give them each a dollar, she requires them to pay the six cents sales tax.