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How to Keep Holiday Spending in Check During Retirement | Retirement
Retirees living on Social Security and other fixed income streams may need to adjust their holiday spending strategy this year amid the high cost of food, retail goods and other items. But with a careful eye and a commitment to budgeting, it’s still possible to have a great holiday while keeping your spending in check.
To manage costs during the season of gifts and gatherings, consider the following:
- Recognize the challenges of holiday spending.
- Develop a realistic holiday budget.
- Follow handy money-saving tips for retirees.
- Implement a solid savings plan.
- Keep track of your spending.
- Manage credit wisely.
- Balance fun and finances in retirement.
Recognize the Challenges of Holiday Spending
It can be easy to get caught up in the spirit of the season. You might have invitations to attend concerts and other events that call for holiday outfits and gift exchanges.
If finances are tight, consider which events you want to attend. You could focus on free and low-cost activities, or attend or host fewer gatherings. You could watch holiday movies at home instead of heading to a restaurant or theater. Gifts can be another big expense. “Many retired people live on a fixed income, so finding bargains on presents is essential,” said Jeremy Gove, partner and financial advisor at Stonebridge Insurance and Wealth Management in Kearney, Nebraska, in an email.
Develop a Realistic Holiday Budget
An easy way to control your holiday spending and avoid going into debt is to calculate how much you have available for gifts, events and splurges. “If you don’t have a budget, now is a great time to create one,” said Lauren Wybar, a senior wealth advisor at Vanguard in Philadelphia, in an email. “A good starting point is to develop an itemized list of all of your expenses.”
Consider creating holiday-specific financial buckets for special events, charities, decorations, and gifts for family and friends. “Determine if these expenses are necessary or discretionary, and if you are comfortable with them given your savings and retirement income,” Wybar said.
Follow Handy Money-Saving Tips for Retirees
Think about ways you can cut costs related to food, entertaining and travel. You might decide to have a smaller party this year, for example. When preparing meals, create a cost-conscious menu and check for discounts on special foods, such a promotion on turkey or ham. You can adjust the menu based on what’s on sale.
If you are planning to travel to see family and grandchildren, consider ways to reduce the costs of your trip. You might find a low-cost flight or a deal on hotels. If you have other relatives driving the same route, consider traveling together if there is enough space.
Implement a Solid Savings Plan
In addition to thinking about spending, you may want to earmark part of your savings for the holidays. “Many retirees I work with include Christmas shopping and travel expenses in their monthly budgets throughout the year,” Gove said. If you aren’t allocating funds toward the holidays regularly, you might decide to start next year. You’ll be able to gauge what you usually spend and prepare accordingly.
Keep Track of Your Spending
Once you have a budget, “it is important to stay disciplined,” Wybar said. “It won’t serve its purpose if you deviate from it.” Before you shop, you might review your budget and even log your purchases afterward. “You can have a generic gift category or get more granular and assign a specific dollar amount to everyone on your list,” Wybar said.
Manage Credit Wisely
Consider the form of payment you’ll use on holiday purchases. If you use a debit card, you’ll have the advantage of spending only what’s available in your checking account. When pulling out a credit card, it may be harder to keep holiday spending in check.
You’ll want to avoid running up debts that could take several months to pay off. “Try not to use credit cards unless you can pay the balance by the next billing cycle,” said Chuck Czajka, founder of Macro Money Concepts in Stuart, Florida, in an email.
Balance Fun and Finances in Retirement
Set aside time to look for deals online and make purchases from home. Those who start early will have “extra time to plan their shopping lists and look for the best sales to fit their budget,” Gove said. This could help stretch dollars further.
Don’t forget to focus on the joys of the season, even if you have less to spend this year than in the past. “Create your holiday shopping list and have fun,” Wybar said. “You’ll know exactly what you can spend, which will provide peace of mind and help prevent post-purchase regrets. Even more important, you won’t go into debt or jeopardize your savings to fund your gift giving.”
