Budget for holiday spending
The holidays can be a major spending trap, one surefire way to derail yourself in the last few days of the year is overspending on the holidays.
You don’t need to bust your budget with out-of-control spending to enjoy the holiday season. The best thing you can do to avoid overspending during the holiday season is to make a list of who you need to buy gifts for and what your spending limit is per person. If you have gone into the holidays with a game plan, you are much less likely to overspend — a mistake that could lead to a difficult start to the New Year.
Your wallet and sanity will thank you if you set up a money plan for the extra expenses that are coming. Also don’t forget to factor in travel costs to visit family members and food and drink expenses for holiday get-togethers. But stay safe!
Review your money goals
As the cooler weather sets in, set aside an afternoon to review your money goals. No matter where you stand in your personal finance journey, moving your finances in the right direction requires setting thoughtful money goals.
Your money goals should help you make financial decisions. As you consider your saving, spending and investing plans, set goals that are specific, measurable, attainable, realistic and timely.
By setting financial goals that are specific, they will motivate you to balance your spending and savings.
Craft a savings plan for 2021
Once you’ve taken some time to set your money goals it’s time to craft a savings plan for 2021. The savings goals that you set should reflect your values and where you are at in life.
For example, you might be saving for your next vacation after Covid-19, building an emergency fund, or maxing out your retirement savings plan. Each is a worthwhile goal that you can factor into your savings plan.
If you struggled to meet your savings goals for 2020, then consider setting up an automatic saving plan. There are great financial tech tools out there to help you make smart financial decisions automatically.
If you’ve decided that you want to save more money, then an automated deposit into a separate savings account can be the perfect solution. Without even noticing it, you can build toward financial health while your tools go to work on their own.
Boosting the amount you save in your 401(k) each paycheck is another automatic-savings strategy that will pay off.
You can put the right systems in place now to start 2021 out on the right foot.
Use up your flexible savings plan
If you have contributed to a flexible savings plan — otherwise known as a FSA, then now is the time to spend it. The funds in your FSA can be used
to cover certain medical and dental expenses for you and your dependents.
Although there are some exceptions, you typically need to use your FSA funds within the year. However, your employer may allow you to use the funds in a grace period of 2.5 months after the end of the plan year. Additionally, your employer may allow you to carry over $500 to use in the next plan year.
If you aren’t sure what rules your employer has in place for your FSA, then take a minute to call your human resources department. They should be able to tell you exactly how much you need to spend by a given date. Don’t let these funds go to waste.
Photo Credit Christopher Sardegna