Money + The Holidays Part I: Holiday Financial Preparation Tips

About the Episode

It’s officially here – the first episode of season two of your favorite money smarts podcast, Making it Count! This episode is all about ways to prepare financially before the holidays and is part one of our Money + The Holidays mini series. Hear from guests Heidi Pauley from Addition Financial and Rod Griffin from Experian as they share expert tips for getting through the holidays without spending all your savings.

5:05

Cristina asks Question 1: “As you've spoken to clients and members over the course of the year, I'm sure you've noticed many changes or trends on how people are planning to prepare financially for the holidays. Have you guys noticed any trends?”

Heidi responds: “I know that this year has been a bit of a struggle for so many people. I have talked to many members who really are relying, unfortunately, on the credit card aspects of it for this season. Savings isn't really something they prepared for this season. So that's a different conversation that we have on how to properly prepare for using credit during the season. But it seems like that's kind of going to be the trend.”

Rod also responds: “I would reiterate that. I think people are considering what 2020 brought. It's caused a lot of us to change our approach in a lot of ways. It's thinking about how we save, how do we use credit? We always talk about credit as a financial tool and debt being the financial problem, especially during the holidays. And we want to make sure that people are making good choices and understand how to use credit to their advantage with the economic realities, especially with COVID this year. I think people are really looking at how they can manage their credit well and their finances going into the new year and evaluating how they're spending for the holiday.”

Learn more: How to Manage Debt Before the Holidays Hit

6:45

Will asks Question 2: “So as we all know, the holiday season is in full swing. What are some last minute savings tips you could give our listeners as they approach the next two months?”

Rod responds: “Two months doesn't sound like very much time and it goes so fast, but there are some things you can do. I always tell people to set a budget or a spending plan. If you don't like to call it a budget, give it a name you like, but you need to know how much you have to spend and how much you need to save as a starting point.”

“And then what we do in my family is set spending limits. I have a huge family – I have seven grandkids. We have spending limits that help us budget so everybody knows how much we can spend on each person. And that helps us set a target and kind of understand what kind of gift buying we can do. So set spending limits for each person, understand what you have going out and use that as a basis for starting to save. That might mean giving up some of the Christmas cookies and the candy, which is really hard for me to do. A little less fudge for me. It is always a good thing.”

Heidi also responds: “Yes. I agree. A hundred percent. The best thing that anybody can do is create that budget. I've worked with so many members and in one particular that sticks out is when you work with someone who's never created a budget and doesn't know where to start. You actually discover that you get an increase in your paycheck when you know where your money is going and how you're spending it. I helped a member discover that they had an extra $200 a month that they could save. I cannot emphasize enough how creating a budget is ultimately most important. You gotta know where your money's going.”

Learn more: 5 Holiday Money Saving Tips & Ideas to Make Shopping Stress-Free

9:05

Cristina asks Question 3: “This time of year can really sneak up on us, just like Rod said. I mean, it seems like it's far away, but it's really around the corner. So what if your gift giving list is longer than our wallet is wide? Is it a good idea to use credit cards and loans to pay for gifts?

Heidi responds: “I'm going to have to say you want to evaluate your list. Especially in these times, here in 2020, does great uncle Bob really need to get a gift? Can't you just go to the dollar store or someplace like that and get something or make something? So I'm going to say you definitely need to evaluate who really is important to shop for.”

Cristina follows-up: “Rod, I know you have lots of grandchildren. I've got two young kids. So what we've done since they were little is we take them to the dollar store and we have them shop for each other, me and my husband, and the grandparents. And it's so fun. Cause you can go ham on a whole dollar store and you walk out there spending like 20 bucks.”

Rod responds: “I think it's a great tip. You watch when kids are growing up and as parents, we all discover that we invest our time and energy and money in this fantastic gift and they open it up and they take it out of the box and they set it aside and then they play with the box. So it's not so much what you're getting. It's the experience too.

“And I think it doesn't have to be about the money all the time. It's not about getting the most fantastic, expensive thing. It's about giving things to people you care about and showing that you care about them. We've all mentioned lists. So I'll jump in on the list too. I always say you should be like Santa and make a list, check it twice. So you use naughty and nice. Everybody in my family, always nice. So it's hard for Santa, but you have to plan. And if you're thinking about using credit, it can help you through a difficult time and it can also help you save money at times.”

“So if you're shopping for holiday gifts and you're thinking about using credit, we go back to that budget and have to know how much you're going to spend. If you're going to use credit to stretch your dollars, you have to know when you're going to pay back that debt and how you're going to pay it back.”

“You also have to think about what you're going to have to give up in the future because using credit is always a trade off. It's about delaying something else or not getting something else later, until you pay off that debt. At the same time, you may see offers for instant credit at a store and you can get a 10% or 20% discount that might work for you.”

“If you are not carried away by it, get one card and get that discount at a store where you're buying lots of things and take advantage of that and then turn around and pay it in full. So you're not taking on debt. That can be a great way to use credit to your advantage. So think about things like that too. Can you use credit not to take on debt, but to actually save you money and give you advantage cash back? Those are the sorts of things that help you stretch your dollars.”

Learn more: 6 Precautions Before Using Holiday Loans for Gift Buying

13:30

Will asks Question 4: “Even if we do plan on using credit for holiday spending, how do we prevent overspending? Is it possible to be generous and financially responsible?”

Rod responds: “Absolutely. The main thing is you have to be disciplined with your spending. Set a budget, make a list that you check as you go along and don’t get distracted by the sale signs. If you don’t shop with goals it becomes very easy to overspend.”

Heidi follows up: “Remind yourself you have a budget and calculate your totals before you get up to the register. Otherwise it is very easy to just add these extra expenditures to your credit card.”

15:20

Cristina asks Question 5: “Those of us with kids know receiving gifts is a serious, much-anticipated event for them. How do we teach our children moderation and appreciation for whatever level of gift giving we can afford?”

Heidi responds: “Have the conversation and set expectations early. Regardless of what the kids get as a gift, it is the thought that counts. We also make our kids a part of providing and giving back to others who don’t have the luxury of getting lots of gifts.”

Rod also responds: “We try to do the same thing. But we also want our kids to understand how to spend money responsibly. When we’re shopping, we give them a set amount of money to buy things with and they get to make their own choices. Do they want to spend all of their money on one expensive item, or spend it on ten less expensive items? It helps them understand that we all have limits and money doesn’t grow on the Christmas tree.”

20:05

Will asks Question 6: “It’s so tempting to apply for every special holiday credit card offer that we see in stores, online or in the mail. What are some strategies we can use to evaluate these offers?”

Heidi responds: “First, you should evaluate the credit cards you already have and see if you have any cash back rewards or points you’re not taking advantage of. Then, if you decide to apply for another credit card, you need to pay attention to the fine print, interest rates, the in-store offers and if there is an annual fee. After your evaluation, estimate how often you're going to be shopping at that store. That should help you make a final decision.”

Rod adds: “If you’re thinking about making a major credit purchase in the coming year, you might want to be careful about applying for a new credit card because it could interfere with your credit score. Check your credit reports once a week for free with Experian, Transunion or Equifax so you can take care of your credit.”

Learn more: How to Evaluate Holiday Credit Card Offers Quickly & Easily

23:40

Cristina asks Question 7: “Last season we spoke with two identity theft and fraud prevention experts about ways to keep our finances safe during the pandemic. I’m sure the holiday season is another prime time for hackers to try to take advantage of online shoppers. How can we protect ourselves?”

Rod responds: “Identity thieves love this time of year. But there are a lot of things we can do to prevent them from stealing information. Be thoughtful, use good passwords and make sure you aren’t sharing any personal information.”

“If you are shopping or applying for a credit card in a store, be sure there isn’t anyone shoulder surfing. They could be standing behind you and capture your information as you are filling out an application. On the other hand, if you are shopping online, it is crucial to ensure the website you are working with is secured and the organization or retailer is reputable. Another thing to remember is be careful of what you share on social media. It’s amazing how much information identity thieves can use to commit fraud.”

Heidi also responds: “That's one thing as we're talking about social media. Be cautious of the ads that appear on Facebook. Do your research and check the better business bureau to make sure the advertised business is legitimate before purchasing from the website. I’ve seen many cases where a member never receives their merchandise or gets overcharged on their credit card because of these sketchy websites.”

29:35

Will asks Quick Question 1: “What’s the simplest way to be financially prepared for the holiday season?”

Heidi responds: “Budgeting! Open your bank account and review the incoming income and outgoing expenses. After analyzing your finances, start saving as soon as possible. Every little bit makes a difference with whatever you have leftover.”

30:05

Cristina asks Quick Question 2: “What’s the best gift you’ve ever received?”

Heidi responds: “So unfortunately, my family is from the north so I was unable to physically celebrate my birthday with them in September. My daughter was so thoughtful that she gathered all the phone numbers of all my closest friends and family and created a video of everyone saying Happy birthday to me.”

31:00

Will asks Quick Question 3: “What’s your best bargain shopping tip or holiday hack?”

Rod responds: “Start shopping in January. My wife and I shop throughout the year to look for the best sales so we’re prepared when December rolls around. I recommend using your phone to check the best rates and to compare prices with online retailers. Technology is a hugely powerful tool when it comes to saving money for the holidays.”

Will adds: “That's a great tip. You can also use the barcode scanner on the Amazon app to compare prices with different items.”

32:00

Cristina asks Quick Question 4: “Do you call the popular event a white elephant gift exchange, Yankee swap, or Dirty Santa?”

Rod responds: “It honestly depends on who we're with at the time. I don't know what a Yankee swap is. We call it “White Elephant” with the family, but with the older members of the family it might be a “Dirty Santa.” It just depends on who's there. We always try to keep it age-appropriate.”

32:30

Will asks Quick Question 5: “Is it a good idea to increase your credit card’s limit to afford holiday spending?”

Heidi responds: “Well that's a good question. Again this comes down to being smart. I would say increasing your credit limit for the holidays is probably not a good idea. If you need to then possibly, but it’s about having a plan in place first before increasing your credit limit.”

Learn more: Should You Increase Your Credit Limit for Holiday Expenses?

33:00

Cristina asks Quick Question 6: “Pumpkin spice latte or peppermint mocha frappuccino?”

Heidi responds: “I enjoy both actually. I can’t pick one because they each go with a holiday season. I am all about pumpkin spice when it comes to fall. But when winter rolls around, I need my peppermint mocha frappuccino.”

Rod responds: “To be honest, I don’t even know what a frappuccino is. If we're talking holiday drinks, I enjoy hot chocolate with a little scoop of vanilla ice cream.”

36:00

On this episode, we shared two downloadable guides to help you prepare financially for the holidays: