The YPN Perspective: Advice on Holiday Spending – Well, Sort Of…

After several years of economic turmoil, the frustrated American consumer is making a comeback this holiday season! Americans have been rebuilding their balance sheets and trimming their debts and are now coming back into the marketplace not only to spread joy this holiday gift season but as a newer and smarter breed of consumer.

So, while checking your smartphone for instant price comparisons and hunting for the perfect gift for that special someone in your life, take a step back to ensure you’re setting your own young-professional self up for financial greatness.

Step 1: List the top three holiday gifts you received last year. Stuck? That’s the point. It’s about giving joy not about how much you spend—as the actual gift is often not even remembered 12 months later (as you’ve just proven).

Step 2: Make a budget and stick to it. Give only what you can afford, and don’t spend more than what can be paid off in one to two month’s time. If you stood in that long line for the Black Friday special, focus on the value of what you spent ($25 book) not the bargain price ($6).

Step 3: We often give the way we want to receive, but you’ll likely miss the mark with your loved one and waste precious money on something they don’t appreciate if you don’t give the way they want to receive. A wife who appreciates quality time with her husband above receiving gifts may appreciate a babysitter and a date night more than a GPS for her car. Understand the types of gifts that your loved one will most appreciate and the money you spend will not be wasted.

After you’ve tackled your holiday shopping, take a moment for some year-end financial planning to set yourself on a path to financial greatness. Begin the New Year right. Build up that emergency fund (3–6 months of living expenses, 6–12 months in a slower economy, if you’re the head of a single-income family, or if you desire greater security), pay off credit card debt, and make sure you are contributing enough to your company’s retirement plan. If you are fortunate enough to receive a raise at the beginning of the new year, increase your retirement savings accordingly. Making retirement planning a priority now can significantly enhance the amount of wealth that you are able to accumulate throughout your working years.

Good Luck!

Danielle Dahn, CFP
YPN Advisory Board Member