A blog written with parents in mind
Saving for a Rainy Day - The Importance of an Emergency Fund
The holidays are an expensive time for families; with the purchasing of gifts, snacks for parties, cards, and more, the spending never seems to end. The 2015 Parents, Kids & Money Survey found that only 40% of parents say they save throughout the year for holiday expenses. Additionally, 62% of parents admit to spending more for their kids over the holidays than they should have, and 9% say they dipped into their emergency fund to cover the holidays.
One way to manage some of these expenses and keep them from piling up is to proactively save for the extra holiday costs. Below are a few quick tips to help you plan ahead for the holidays and avoid overspending.
Save throughout the year: Consider opening a separate savings account just for holiday-related expenses. You can put a little money into this account each month so that when it comes time to buy your holiday gifts, it won’t be such a big hit to your checking account.
Make a list by dollar amount rather than by item: When creating your budget for holiday expenses, consider how much money you want to spend on each person you’re buying gifts for instead of specific items. That way you won’t feel compelled to purchase an item when it turns out to cost more than you anticipated. Add up all of those amounts on your shopping list to determine a savings goal for your holiday account.
Talk to kids about trade-offs: Use the holiday season as a time to teach your kids the value of prioritizing and making trade-offs. If your child hasn't stopped talking about getting the latest dance-off video game since school ended last summer but their list includes other gifts they are not as passionate about, help them prioritize their list with "must haves" at the top. Explain that it’s possible they won’t get everything on the list, but by putting the items they most want at the top, they stand the best chance of getting them.
Make adult trade-offs, too: Saving for the holidays can be as simple as skipping one coffee date per week or trading family dinners out in favor of cooking at home. If you’re having trouble reaching your holiday savings goal, take a look at all of your expenses and decide where you can make some cuts.
By sticking to these simple suggestions, you can be better positioned to make it through the holiday season without going into the red.