No, it's not too early to start saving for the holidays
Life Kit
This Life Kit episode urges listeners to start planning holiday finances early to avoid debt and stress. Financial experts provide actionabl
Key takeaways
- Starting holiday savings now can prevent high-interest credit card debt later.
- Creating a baseline budget by tracking income and essential expenses reveals how much is available for discretionary spending.
Main topics
- Holiday budgeting
- Financial planning
Notable quotes
It's always a good time to think about future spending, especially because you can do a lot more when you have more time.
Conclusion
By planning early, spreading out expenses, and focusing on what truly
Transcript preview
Speaker 1 (0:00) I haven't seen my son since 2012. Speaker 5 (0:03) This is Deborah Tice. The disappearance of her son, Austin, is one of the biggest missing person cases in the world. What do you want from me? I should solve the mystery. Speaker 1 (0:13) I know that my son is somewhere alive. Speaker 5 (0:16) Listen to Where Is Austin Tice from NPR's Embedded and BBC Radio 4 on the NPR app or wherever you get your podcasts. Speaker 2 (0:27) You're listening to Life Kit. I'm Mariel Cigarra. Now, if I'm you, maybe I'm thinking budgeting for the holidays. It's a little early, don't you think? The pumpkins and the skeletons haven't even come out yet. But when I asked this very question to accredited financial counselor Bethel Hapti, she said a hard no. Speaker 3 (0:50) It's always a good time to think about future spending, especially because you can do a lot more when you have more time. Let me just set a goal here Speaker 2 (1:00) for us. Knowing what we know about credit card debt, how high those interest rates are, how the debt can snowball, let's plan ahead so we don't accumulate debt in December that we'll have to pay off in 2027. That Speaker 3 (1:12) is the ideal scenario, is that the money that you're spending is just the money that you're spending instead of... the money you're spending plus interest to credit card companies in January and Speaker 2 (1:22) February. Speaker 2 (1:25) On this episode of Life Kit, how to create a holiday spending plan now. Starting with takeaway one, get a baseline. Bethel says a lot of the people she talks to don't actually know how much money they bring home every month after taxes and health insurance premiums and retirement contributions. So that's the first number you want to know. That pot of money per month. And then I Speaker 3 (1:50) think even fewer people beyond that know. The amount that they need to run their life. Rent, transportation, those fixed expenses, but also those variable expenses that are pretty consistently high and necessary. Daycare, groceries. Speaker 2 (2:05) Also include any debt payments. And that's your second number. The bare minimum you spend on necessities. Then you're going to do the math. The big pot of money minus the second number. Okay, what's left? That's the number that you'll be able to use for... Speaker 3 (2:20) your fund spending, discretionary spending in the month, or that's the money that will go towards savings. So creating even that rough and tumble baseline budget is really important. Speaker 2 (2:34) Now you've got about three months, a little more, to save up for the holidays. So multiply that number by three. That's how much you're working with. And that's how much you can afford to budget for holiday expenses, including travel, gifts, seasonal activities, you know, a little sleigh ride, and hosting gatherings. It's a bit of an overestimate, though, because you also need to consider the non-necessities that you're already spending money on. You probably don't want to skip out on everything that's fun for three months just to ball out over the holidays, but maybe you do. That is up to you. Now let's get a little more information by doing a retrospective. Look back at your credit card and bank statements and figure out how much money you spent on the holidays. last year? Can you afford to spend that much again without taking on debt? Also consider, what did you spend the money on? And how do you feel now about having spent money on those things? Speaker 3 (3:27) How happy were you with those purchases? Like, were those expenditures actually aligned with how you want to spend in the holiday season? Speaker 2 (3:38) Okay, takeaway two, spread out your holiday expenses. As we talked about, one way to do this is to start saving money now that you can use on holiday gifts and travel and events come late November, December. If you're currently setting aside money in a savings account, you might just label some of it differently. You know, this is for holiday spending. Chidozi Ibubuchi is a financial therapist and gave us this advice in an episode about saving up for big events like a friend's wedding. Speaker 6 (4:07) Maybe it could be 50 bucks a week or 50 bucks a month. That adds up to how much you think you may spend. And that's a really cool automatic way to start saving towards these expenses. Speaker 2 (4:19) You can also look at your discretionary spending and cut back so you can save more. Maybe you don't book the expensive weekend trip this fall. Or you do yoga at home with YouTube videos rather than going to classes. Or you cancel the streaming subscription that you don't use. Really getting Speaker 3 (4:35) a sense of what you're... non-essential spending is each month and if you can make some sacrifices there to save more. Speaker 2 (4:43) I asked Bethel, what about temporarily decreasing the amounts you're saving for retirement, as long as you set a reminder to reverse those changes come New Year's? She wasn't a huge fan of that plan, but says