Nobody wants to be on Santa’s Naughty List – especially when it comes to finances. But spreading holiday cheer could leave you broke if you fail to manage your money. During the holiday season, there are many temptations that can lead to financial mistakes. Let us examine some of the reasons why people may end up on the naughty list.
You may find yourself on the “Naughty” list if you:
- Didn’t have any financial goals, instead just cruising through life hoping things are on the right track.
- Didn’t have a spending plan.
- Increased your credit card debt throughout the year, or didn’t reduce the debt you already had.
- Took on “bad debt” for things you couldn’t afford.
- Didn’t save money on a regular basis.
- Didn’t have an emergency cash reserve.
- Didn’t have proper insurance in place to protect you and your family.
- Still don’t have a will!
- Took investment advice from someone who actually doesn’t know much about investing.
To remain on the nice list, you must make smart money decisions. Santa will be adding you to the “Nice” list if you:
- Had goals in place to guide financial decision making.
- Know where you spend your money (i.e. you have a spending plan) – this also comes in very handy come Christmas!
- Always shop with a list.
- Made inroads into your mortgage.
- Have financial protection in place for you and your family.
- Saved a little extra money for retirement.
- Invested sensibly in a widely diversified and low-cost way.
- Or, if you’re not sure of some of the answers to the questions above, you seek advice from a financial advisor.
Tips to move from the naughty to the nice list
Start by making a realistic plan on how much you can afford to spend. If you have already overspent, return items and get back to your budget. Next, use smart shopping habits such as waiting for sales, looking for discounts and coupons, and most importantly focus on comparison shopping.
Credit cards are a naughty option, so stick to the nice option and use cash. If you can avoid using credit cards, you will avoid facing the prospect of an unwanted credit card statement come January. Also, using cash, even to the point of leaving your cards at home, forces you to stay within budget, particularly during gift shopping and the lure of sales.
Signs that you might be headed to the naughty list
One tip-off is that you stop checking the balance on your credit card, or you are checking before making every purchase because you are concerned that you are at your limit. Another telltale sign that you are headed to the naughty list, is that you start making other poor financial decisions such as paying bills late or the minimum on your credit card, opening more credit or store charges. If you pause your retirement contributions and neglect investment obligations, these are not good signs.
How to make it a great holiday even if you are struggling
For those who face financial challenges with Christmas shopping this year, the first step is acceptance of where you are. Determine how much you can afford to spend and the impact of adding debt to your financial situation.
Next, focus on the most important people that will make your holiday celebration great and find out what will make them happy. You might be surprised that expensive gifts are not even on their list. Do the best that you can and don’t try to match what others who are not in your financial situation might be doing. And finally, ask for help from family, charities, and other organizations if your financial situation is dire.
So, consider these suggestions to remain on the “Nice” List as you enter the New Year. If this approach seems too daunting, make your list and ask the SFCG Team to help you check it twice. Contact us at [email protected].
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