Mike Turi sits down with host Malik Mingo on Great Day Louisiana’s Christmas in July special about planning your end-of-year gift budget.
Great Day Louisiana: Christmas in July
Budgeting for Christmas
First and foremost, you know it’s coming. Don’t spend January stressing over your credit card bill, wondering how you overspent. Christmas falls on 12/25 every year, indefinitely, until we are swallowed up by the sun or whatever.
The recurring theme in all our budgeting discussions is, to be honest with yourself about how much you want to spend and to be intentional about how you save for it. If it’s important for you to have a certain amount of money to spend on Christmas, divide that number by 12 and start setting aside money for it beginning in January. For larger financial goals, it’s helpful to get into the habit of paying now by saving and then actually buying them later.
Best Savings Vehicle
I’m a big fan of categorizing funds into different buckets or accounts. My mind is already a mosh pit, so I enjoy having my spending goals clearly defined.
What’s more effective: having $10,000 in a general savings account or distributing the money into separately labeled accounts/buckets for specific purposes ($5,000 Emergency Fund, $2,000 Travel, $2,000 Home Improvement, $1,000 Gifts/Celebrations)?
My ultimate advice is to BE SPECIFIC. It’s the key to guilt-free spending. I recommend all my clients use Ally Savings for this very reason. Ally allows you to categorize your goals into buckets under one high-yield account, eliminating the need for multiple bank accounts. All you have to do is start funding them! Once again, you’re paying now and buying later using this method, so it’s much harder to overspend as opposed to buying now and paying later. When you buy now and pay later, you’ve detached receiving a good or service from its affordability. Most importantly, by setting clear goals and aligning your spending, you are beginning to gather empirical data on your priorities and can more thoroughly review your trade-offs.
Struggling with Budgeting?
Regarding our budget, water always tends to find its level. But that level isn’t always healthy. At the most basic level of financial health, your income must exceed your expenses. For instance, I worked with someone recently who had an average credit card debt of $20,000 for over five years. That was their emotional level of being financially “okay.” However, that $20,000 annual credit card balance cost them $5,000 in interest charges. That’s not good.
In general, I think the biggest challenge we all face is the evolution of our needs. “Wants” are subconsciously being converted into “needs” hence the term lifestyle inflation. Need evidence? Reflect on what you considered a “need” 10 years ago or in college. You’ve likely also had a decent raise in income from that time, but your spending might be moving in lockstep.
So what are your options?
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Go all cash. There’s a big difference between clicking a few buttons online and spending $100 and physically handing over a $100 bill.
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Get back to basics. Tear it all down—not your housing costs, daycare expenses, or any other true needs. But maybe you have 1000 subscriptions? Or the convenience of Amazon and online shopping is overpowering. Cancel it all and see what you actually miss. Or set up a specific routine for when online purchases can occur. Take the spontaneity of having anything in the world delivered to you within 48 hours. It’s probably costing you a small fortune.
Alternative Forms of Gift Giving
We are constantly bombarded with advertisements for material goods. It is what it is. It doesn’t mean that’s what’s important. A common observation I’ve made while working with families is that experiences and time spent with loved ones far outweigh consumer products. And that upon deeper reflection upon one’s spending, most consumer products are an expression of such. As in, if you peel back the layers of why someone might want a really nice dining room table, it’s actually because they need one that is big enough to have family meals. So it’s probably not important for it to be fancy – just spacious and sturdy.
