The 9 Biggest Financial Mistakes You Can Easily Avoid During the Holidays

The holiday season has finally arrived, and that means the start of a very active time of the year filled with travel, the arrival of guests, holiday parties, and, of course, holiday gift shopping. It’s also the time of the year when many people make common financial mistakes – such as spending way more than planned on costly, last-minute gifts. With that in mind, here’s a closer look at the 9 biggest financial mistakes you can easily avoid during the holidays.
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#1: Not having a holiday budget

This is the easiest mistake to avoid since a little advance planning can help you
prevent overspending during the holiday season. If you are planning on traveling,

for example, then put together a budget covering details like flights, hotels, gas,

and food. And even if you are planning on staying home for the holidays, think
about planning a total entertainment budget for the family that will help you stay
on track throughout the next two months.
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#2: Spending too much on holiday gifts

With a constant deluge of holiday commercials on TV and advertisements across
the web, you can easily be convinced into thinking that you should be spending
two, three, or even four times the amount that you originally planned. Thus, at the
very outset of the holiday season, simply draw up a list of all gift recipients, and
then make a brief notation of how much you plan to spend for each of them. That
will let you see very easily what your overall holiday gift budget is going to be.

#3: Buying items on impulse just because they’re on sale

As a corollary to #2, the easiest way to break a holiday gift budget is by giving in
to impulse buys. Black Friday specials are the worst temptation – some items
might be marked down so low that you start scooping up gift ideas that you might
never have considered before. If you are buying an item just because it’s
“marked way down,” then you are doing it all wrong.

#4: Skipping or deferring payments at the end of the year

At the end of the year, cash flow can be tight, and that’s perhaps the most
obvious reason why people find themselves slipping behind on payments due in
November and December. If you defer credit card payments, you are just
sacrificing short-term gain (extra cash flow) for long-term pain (late fees and
penalties that you’ll experience in January).
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#5: Putting all purchase on your credit cards

If you are maxing out credit cards with holiday expenses, you are committing a
potentially costly financial mistake. Most credit cards have absurdly high-interest
rates on them, so if you are putting major purchases on credit cards, then you
are going to be paying off a lot more than just the original price of the item. If
possible, try to pay with cash or with debit cards. Credit cards should be the last
priority.

#6: Counting on the year-end holiday bonus

Yes, many employers do hand out the equivalent of a year-end holiday bonus,
but you shouldn’t count on one to bail you out at the end of the holiday season.

#7: Waiting until the last minute to start holiday shopping

You don’t have to join the masses and head out to the stores on Black Friday,
but you should think about starting your holiday shopping sooner rather than
later. For one, you will be able to take advantage of much better prices if you
have more time to comparison shop. And, secondly, you won’t miss out on
sold-out items and have to trade up to pricier items.

#8: Not taking advantage of coupons and rewards

There is actually a lot of “free money” out there that you can take advantage of. If
you are using credit cards, for example, then use credit cards with cash back
rewards. If you get holiday circulars in the mail, take time to cut out coupons
or rebates or discounts that you can use later. And if you are getting holiday
specials in your email inbox, jot down the special promotional codes to get
discounts.
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#9: Taking money out from emergency funds or retirement funds

If you are tempted to take money out of a retirement fund, think again. Unless
you are older, those 401(K) withdrawals will probably come with a tax penalty.
Moreover, if you are dipping into “rainy day” or “emergency” funds for extra cash,
you are only setting yourself up for problems later down the road when you really
need the money.
**
Remember – financial steps that you take in late November and December will
impact your budgetary situation in January. If you don’t want to start the New
Year with expenses, late fees, past due notices and unwanted credit card bills,

then try to avoid the 9 financial mistakes listed above. Take charge of your
financial life, and avoid the classic traps and pitfalls that many people fall into
during the busy holiday season.
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Written By:

Lorra Brown is the CEO of LBE
Consulting, PLLC based in Grand Prairie,
TX. Lorra is a multi-faceted business
strategist that works with a plethora of
clients around the country. She provides
accounting services and business
consulting to a diverse bed of
self-employed professionals. Her life’s
mission is to help women gain
empowerment and change their mindset
about their finances.
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