Retirement Accounts Are Off Limits for Paying for the Holidays
December 07, 2016
Year after year, we spend more than we planned on during the holiday season. According to a 2015 study from T. Rowe Price titled “2015 Parents, Kids and Money,” 62 percent of parents said that this year they will spend more for their kids over the holidays than they should have. 56 percent of them tapped their bank account to pay for the holidays and 47 percent rely primarily on credit cards the report indicates. The most surprising and ridiculous of all is that a small minority of parents raided their retirement accounts and their emergency funds to pay for holiday shopping! As many of you know, this is NOT a good idea.
We know that it is tempting to splurge on those you love during the holidays, but you aren’t doing yourselves any favors by overspending. As we stress time and time again, make a budget – a holiday one – and stick to it. Figure out what you can truly afford to spend and spend only that. Leave the credit cards at home and try to use cash for most of your purchases if you feel you are likely to overspend.
When the holidays are over, start planning ahead for next year. Set up a separate savings account for your holiday season 2017 and put money aside from every paycheck to spend for next year. If you are paid biweekly and put $50 each paycheck into this account, that will give you $1,200 to spend on gifts. Staying within your budget will also help you to enjoy your holiday and not get stressed over the costs associated with it.
If you would like help setting up an account or a budget, we would love to help you. Contact us at 763-231-9510 to schedule a meeting with one of our Wealth Advisors.