So many of us can let the festive spirit of the season take control of our wallets. To combat the holiday hangover before it starts, you may consider meeting with a financial planner to discuss how to keep your finances under. We reached out to a local financial planner to discover key pitfalls and how to develop a strategy to keep your finances in check during the holiday season.
Leesa Valdez
Financial Advisor
Prudential Advisors
With more than 15 years of experience as a financial advisor, Leesa Valdez provides a full range of financial services, including cash management, insurance planning, investment planning, tax planning, retirement planning, and cash flow and estate planning strategies. Previously, Leesa had a 23-year career in banking and was a successful entrepreneur for more than 16 years.
What are the common financial pitfalls people face during the holiday season, and how can people avoid them?
The holidays are the most difficult time of year for my budget-sensitive clients to stick to a plan. There are too many temptations with the urge to splurge, or impulse buying presents itself. The best way to plan for the holidays is to have a plan. Make the plan well before the holiday season begins so emotions don’t take over.
Do you have suggestions for creating a realistic holiday budget that considers gift-giving, travel expenses, and entertainment costs?
The recommended approach is to create a budget in January after you have a realistic idea of your spending. January is a great time to reflect on the amount you spent and decide whether you want to spend more or less next year. Create a budget using the maximum amount you will spend in each area, then divide that number by 11. Then open a separate savings account and add what you come up with (one eleventh of the total) each month. Make sure you always have a small ‘miscellaneous’ category to care for the unexpected.
Are there any specific strategies or tools you recommend for tracking and managing holiday expenses?
Budget, budget, budget! Plan, plan, plan! It also helps to have an accountability partner who will hold you to your budget, and you can share gifting and entertaining ideas with them.
Are there any tax implications or strategies I should be aware of when it comes to holiday spending or gifting?
This is a concept that is best addressed as part of a full financial plan. If gifting concerns are a tax strategy, this is something you should already be aware of and can use those gifting strategies over the holiday season.
What is the best approach to deal with the pressure to overspend during the holidays, especially when it comes to peer and family expectations?
This is where an accountability partner (or spouse) helps a lot. You can also prepare friends and family by telling them you are sticking to a preplanned budget this year. Most people understand and will support your efforts.
Final thoughts?
So many people focus on the gifting part of the holidays and use that excuse to overspend and get into debt. The purpose of the holidays is to celebrate with friends and family. For so many years, I tried to outdo my gift-giving with my kids by making the holidays bigger and better than they were the year before. My children are grown and have children of their own now, and the holidays they remember the most are about spending time together and playing games. Also, family trips in lieu of gifting always create lifelong memories.
Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries. Leesa Valdez offers investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Leesa Valdez offers insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies.
