Avoid These End-of-year Financial Mistakes

The end of the year can be a financially stressful time: Between gifts, parties, travelling, and festive foods, costs really add up. And with all those obligations, it can be easy to overspend and regret it later when the credit card bills arrive in January. This year, change the narrative and be proactive so you can actually enjoy the holidays without money worries.

Avoid splurging on a pricey trip

Last-minute travel plans can be devastating to your bank account. If you’re thinking about using a spring or summer vacation as a gift, wait a few weeks to actually book those tickets. As a general rule, it’s best to book travel about two months ahead of time.

If you must travel last-minute, you may get better deals by being flexible. Be open to all airlines, the possibility of connecting flights, less desirable departure and layover times, and consider flying to or from nearby airports that may offer cheaper options.

Don’t overspend on holiday gifts

It’s easy to get carried away spending on gifts, particularly if you have a large family or an especially generous friend group. If you’ve already procrastinated on your shopping, I know how easy it is to impulsively spend when you’re stressed for time or caught up in the enthusiasm of decorations and music in stores.

Set a realistic holiday gift budget beforehand and make sure to stick to it. Consider physically writing down the specific things you want to buy before you buy them, and don’t stray from those items. This is the time of year to indulge, but make sure you’re being thoughtful about it.

Don’t rely on credit cards

It’s tempting to think you’ll pay your credit cards off in January after the holidays, but unexpected expenses often come up, making that difficult. Then you get stuck paying high interest rates, damaging your credit score. Set a realistic holiday budget primarily using cash or money already in your bank account instead. Prioritize what’s most important to you.

Be strategic about charitable donations

First things first: Of course you should donate to charity. I am not Scrooge McDuck here. But while donations to charity are admirable, make sure they fit into your overall financial plan. Donating appreciated assets (like stock) can have bigger tax advantages than putting cash into a bucket.

Bottom line

Look, it’s the holidays. If you do overspend, hopefully it’s on people you love. I cannot endorse maxing out your credit cards in the name of holiday spirit, but do allow yourself to indulge and enjoy the merriment this year. As long as you’re proactive about how you strain your budget, you won’t go too overboard. Hopefully you’ll thank yourself in January by starting the new year focused—without holiday debt dragging you down.