Spend Less on the Holidays
The holidays are a time of family, rejoicing, and buying. Those holiday expenses can really add up quickly, and many a careful budget has fallen prey to the month of December. Last minute deals, unexpected guests and items that are too good to pass up all contribute to make the holidays very expensive.
Plan for the Holidays
To help eliminate some of the overblown expenses in the month of December, you should start planning a full year in advance. If you know that you traditionally spend around $1,000 on gifts, decorations, parties, dinners and babysitting, put $100 a month into a special account just for the holidays. In December, empty the account as you celebrate, and then in January you can start celebrating for the next year. These savings help you avoid using credit cards and costly finance charges.
In addition to savings based on an estimate, you should be preparing a budget as to how much you actually plan to spend on each gift recipient on your list. You’ll also need to include any extra baking supplies, decorations, or special events of the holiday seasons such as special performances or trips to see relatives.
Prepare your budget immediately following this year’s season to be sure you don’t forget anything. Then, compare your savings to your budget. If there is a large disparity, you’ll need to find items to reduce on your budget or save more every month.
Holiday Savings
One of the best ways to reduce your holiday spending is to buy when you find gifts on sale throughout the year. Rather than waiting until the sales in December, buy a gift or two as you see it in the store – be it January or August. You should most definitely purchase wrapping supplies and new decorations immediately following Christmas to save more than half of what you’d have to spend next year. Store your holiday stash in a closet and add to it as the opportunities arise.
Rather than buying a present for every sibling and spouse on your list, put everyone’s name in a hat and draw. This lets you buy a single present, presumably spend a bit time and money finding just the right thing, and avoid having to buy for the five others you would normally have to give at least a token gift.
Speaking of token gifts, rather than breaking the bank on something elaborate, give a small gift of gourmet chocolates or picture frame along with a handmade item or the gift of time. Create a coupon for a free night of babysitting for your sibling with children. Take your children on a special outing or arrange a family trip rather than buying many expensive gifts.
For families that seem to have everything, arrange a present that is truly unique and customized. Order a magazine subscription or name a star after the family. When you take time to find a gift that suits the personality of the recipient, you don’t’ need to spend much. It may very well be that your CD compilation and clever coffee mug are the best presents she gets this year – if only because you’re the only one who took time to personalize her gift. The amount of money spent never decides the true value of a gift.
Planning a Vacation of Value
A vacation can be a very valuable thing. Studies have shown that vacations help to break the cycle of work and give you a fresh outlook and higher productivity. They also help to reduce stress which is a tremendous plus in all aspects of life. But a high-priced vacation isn’t necessarily the most valuable for you overall. It could be that a last minute jaunt for a steeply discounted price gives you all the rewards of a luxury resort without the worry about breaking the bank.
Stick Close to Home
Some of the best vacations may be in your own backyard. Rather than buying plane tickets and arranging a rental car, consider a drive to a national park in your area or to a city a few hours away. You’ll be away from home with new sights and scenery, but you’ll also be saving quite a bit without having to book a flight. Driving also gives you much greater flexibility when it comes to exploring as you’ll have a car along with carseats and the comforts of home readily available to take a day trip or just check out the local hot spots.
Take Advantage of Packages
Packaged travel is almost always less expensive than arranging a trip a la carte. To get a truly great deal, sign up to major travel websites and receive email alerts of last minute specials. Book these vacation packages a few days or a week from now and you can save 75% off the price others have paid. You’ll be taking up the unsold seats on a plane or the unfilled hotel rooms which are why you can arrange such as bargain. Of course, you’ll have to be flexible to find a last minute deal, but even a not-so-last minute deal can offer you savings over a traditional trip.
Go When Others Aren’t
If you want to go to Disney World, you should go when the others aren’t there. School children are free to travel over the Christmas holidays, spring break and summer. So plan on heading to Disney World in October or February when all the children are in classes and the parks have less people, shorter lines and more to see and do.
The same is true of golfing or beach vacations. Pick a destination and research when the off season occurs. Then book your travel during that time. Be leery of booking travel in the Caribbean during the peak of hurricane season (August – October), but if you do, you may be able to secure fabulous deals for being willing to take the risk.
Check Out Member Benefits
If you’re a member of a professional organization or a fraternity of some kind, look into the perks that membership brings you. Likewise, check out your insurance perks and credit card advantages. It just may be that you can get an overall discount or at least add a day for free at your hotel.
Take a Drive
Stay a bit away from the action and you’ll be able to save. Rather than staying at the base of the mountain only footsteps from the lifts, consider a ski vacation rental which requires taking the bus or driving. Likewise consider a hotel farther away for any theme parks. The farther you’re willing to drive for the day’s adventures, the more you’re likely to save. Just remember there is a balancing point between hassles and benefits. Be sure to consider your own tolerance for drive times, traffic and toddlers in car seats before booking the hotel thirty minutes from the Magic Kingdom.
Learning the Value of Money Starts Early
You can teach your children the value of money almost as easily as they can learn to count their pennies and quarters. The fact that they even have pennies and quarters to count is a huge step in the right direction. Teaching your children about personal finance will serve them with a life lesson arguably more valuable than any other.
The Source of Money
Children are often confused as to the source of money. It appears in your wallet or at the ATM machine, so why shouldn’t they wonder if it just appears when you need it. Consider carefully any question you child asks about money as it will be a valuable learning opportunity. If she asks for a dollar, rather than giving her the flip, “Do you think money grows on trees” response, explain to her how you worked to earn those dollars and you don’t know about just giving them away.
Set up a way for your child to earn money. An allowance may be tied to chores, or it may not. But offer your child a chance to make a few dollars by watering the plants or taking on a chore outside of their normal range of household duties. Then pay her for her efforts. It won’t take long to learn that work brings rewards and those rewards pay for the fun stuff in life and can be further used for savings and investing.
Children and Savings
Of course as fun as is it to spend every dollar you make, that is not the best example of wise financial planning. Instead help your children understand the value of saving money for the things they want. When your child asks for a new toy at the store tell her to save her own money. If it’s particularly expensive, offer her a deal to match her funds or pay the bulk of the price when she reaches a certain target savings goal.
To help your child learn to save, start a piggy bank. Put all of the spare change around the house in the bank to give it a satisfying rattle and add to it on a regular basis. Give your child some coins as part of her allowance so she can save those even if she spend the bills. Encourage her to save the bills as well.
When she’s saved enough, take a trip to your bank to see about opening a children’s savings account. She won’t understand the formulas for accruing interest, but she can see the result in a statement every month or as she deposits a bit more over time.
Investing
You can help your child learn about investing by giving her a piece of a favorite company – stocks. Buy her a few shares and when she is old enough to do the math, let her help you figure out their current worth and how much money she’s made. Let her keep the stocks, adding to them over the years to build a nice portfolio to start her adult investing. She will not only have a foundation of stocks and savings, but the knowledge you’ve worked so hard to impart over her childhood.
Ten Ways to Avoid Overdraft and Bounced Check Fees
In the past, any check that was written that exceeded your checking account balance would be rejected by your back. ATM transactions and debit card purchases that weren’t backed up by funds would be denied on the spot. Not only would these transactions be denied, the bank would hit you with a huge fee for having insufficient funds in the bank account. A fundamental key to saving money is to reduce unnecessary fees like these.
Now, instead of the old non-sufficient funds fee, many banks are charging overdraft fees when customers exceed their bank balance.
The banks will allow you to write a check, make a debit card purchase or ATM withdrawal even if you do not have enough money in your account to cover the transaction. The bank will then charge you a hefty overdraft fee for the “privilege” of overspending. Overdraft fees can be as high as $35 per transaction and some banks will even charge up to $5 for each day that your account has a negative balance.
Banks make huge profits charging overdraft fees. According to The Center for Responsible Lending, banks rack up $17.5 billion a year in overdraft fees.
Use these tips to avoid paying high overdraft fees:
1. Record all transactions. Make sure that you record each check that you write, including the date. Also record each ATM transaction, and don’t forget to record any fees that may be associated with each withdrawal. Using an out of network ATM can tack on an extra $2-$3 for each transaction. These can add up and cause you to overdraw your account.
2. Use automatic payments. Cut down on the number of checks you write each month by signing up for automatic utility and credit card payments. You can set up automatic payments on specific dates and for specific amounts, but make sure that you record each automatic payment an any associated fees in your check register.
3. Go over your monthly account statement. Check your account statement against your check registry each month. Don’t hesitate to contact your bank if you have questions about your statement. In between statements, online access can help you keep track of your spending and can help you spot problems before they become large headaches.
4. Keep extra money in your account. You can incur substantial fees,even if you overdraw by a few cents. Keep a stash of extra money in your account to provide a cushion for forgotten ATM fees or incorrectly recorded transactions. Pick an amount that you are comfortable with, $50 is a good place to start, and keep it in your account for emergencies.
5. Sign up for online alerts. You can keep a watchful eye on your bank account balance by signing up for email alerts when your balance drops below a preset limit, usually anywhere from $50-$100. When you receive an email alert, make sure that you replenish you account promptly.
6. Stay away from “overdraft protection” programs. You may be enrolled in these pricey programs automatically when you sign up for a checking account. “Overdraft protection” can cost as much as $35 a transaction and many banks and credit unions charge between $2 and $5 for each day that you keep a negative balance. Check your checking account agreement to see if you were signed up for one of these programs without your knowledge. If you find that you have been enrolled in an overdraft protection program, contact your bank to opt out.
7. Link your checking account with your savings account. By linking your checking account to a savings account or credit car account, you can save costly overdraft or non-sufficient funds fees. There may be an annual fee associated with this service and you may be required to pay a small fee for each transaction, but it is still less costly than bouncing a check or depending on the banks overdraft protection service.
8. Avoid using debit cards for gas or to reserve hotels and rental cars. Your debit card can be use just like a credit card, but unlike a credit card, merchants place holds on your money when a debit card is used for gas or for hotel and rental car reservations. The hold can be up to 20% above the final bill and can leave you short of cash for several days, even if no money is withdrawn from your account. Such a large block can impact checks you have written or automatic payments you have scheduled. This could lead to a negative balance in your account.
9. Use cash for small purchases. Frequent use of your debit card can make for a nightmare when it comes time to balance your checkbook. If you make several non-PIN transactions, you can also end up with a lot of “pending” transactions at the end of the month, making your check balancing much more difficult. Non-PIN transactions aren’t cleared for several days and this could cause overdrafts if your checkbook isn’t carefully balanced.
10. Contact your bank if you make a mistake. Everyone slips up every once in a while. If you bounce a check, deposit enough money into your account to cover the check and any overdraft fee that your bank may charge. If it is your first overdraft, call the bank as soon as you realize that you have overdrawn your account. Some banks may offer a one-time overdraft fee waiver.
By following these tips, you can avoid the embarrassment and unnecessary expense of a bounced check or overdrawn account.