Savvy Money

By Kim Sponem

I always spend way too much money during the holidays and then have nothing but regret when my credit card bill comes in January. Do you have some tips on how I can control my spending?

Early in the year is a great time to think about holiday budgeting! A little planning now can make this coming year’s holiday brighter (and greener)!

A simple way to budget is to estimate your holiday expenses by either looking at your purchases from this past holiday season, as a start, or by thinking about what you plan to do this coming year and projecting what you’ll spend. The key to this estimate is to remember not only gifts, but charitable donations, postage, cards, wrapping and shipping, food and entertaining and travel expenses, too, to get a true picture.

Then divide the total by the number of paychecks you will get this year and set that amount aside in a special savings account for the holidays. Setting the deposits up to be automatic insures it is done and makes saving easier than breathing.

If the estimate you come up with for your holidays in 2015 is too high, start thinking now about where you could lower your spending. Some ideas:

• Have a conversation with family about expectations this year—be truthful that you are not planning to spend as much this year. They will understand and just might be grateful.
• Plan to make gifts or create gifts of your time and talents for others.
• Create a gift list that will lower your costand stick to it.
• Consider some “group gifts” for a family, a game for all of them, a movie night basket, or the makings of a great dinner.
• Find out which retailers offer discounted gift cards so you can give more without spending more.
• Set yourself up to receive discounts from retailers your loved ones frequent. Liking them on Facebook or following them on Twitter can mean savings to keep your spending plan in line.
• Use a credit card with flexible points like Summit’s Visa Rewards card, where you can choose cash back or merchandise.

Let’s say you estimate your holiday spending to be $500 and you’re paid bi-weekly. If you decide to automatically deposit $20 per paycheck to a special savings account, you’ll have $520 by the end of the year, plus the joy that comes from being in control of your money.

How do I know if I’m contributing the right amount to my 401(k)?

There is not a universal answer to this
question, but I do have a few tips:

• Save as much as you can afford for your retirement. You want to have a sufficient amount of money for your living expenses and for building your short-term savings. Then, the more you can put away for retirement, the better. I’ve never met anyone who said they wished they had saved less for their retirement, but I’ve met plenty of people who wish they had put more away.
• There is an easy way to ensure that over time, your 401(k) is growing more as you earn more and as you get closer and closer to retirement. If you are already contributing to your 401(k), and you receive a raise to start the year, consider putting half of your raise each pay period into your 401(k).
• If your employer offers a match, be sure to contribute at least to the match. Otherwise you are giving up free money for your retirement years.

If you need more specifics for your situation, it’s a good idea to consider how your 401(k) contributions fit your long-term plans. A financial planner can help you do that.

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