As we enter the final two months of 2020, it’s a good time to look at your money more closely. Holidays, end of the year expenses and how to start 2021 with finances in good shape are on everyone’s mind. There is still a lot that isn’t known about how COVID will impact finances in the long run and things can feel unsettlingly fluid. Let’s talk about some ways to help ease the unsettled feelings when it comes to your money.
I’m going to start this by saying that under no circumstances should you feel obligated to gift or buy another person anything. A kind letter, quality time or something upcycled or handmade with things you already have can mean more than a new gift. I have a friend who re-purposes cards she has received over the years to make new cards every year. Each card she gives is a handmade work of art and they are beautiful. Another friend makes baking mixes as gifts and puts them in pretty sealed jars. I treasure and enjoy those gifts each year as meaningful and kind. This year many folks will be in the position to say “finances are tight, I don’t think I can buy gifts for everyone.”
If you have looked at your finances and determined you are financially able to gift people, great! Please make sure you don’t get lured by the commercial tactics out there. The idea of “buy more to save more!” doesn’t really equate when it comes to holiday gifts. Make a list, set an amount you’ll spend per person and stick to it.
Cash on Hand
A trick I learned forever ago was to use cash. If I am going to buy a gift for my Aunt Jane, I only bring the money I want to spend on Aunt Jane in the store with me. No checks, no credit or bank cards, just my cash. I make sure to factor in tax when I am shopping and once I’ve hit my amount I can spend, that’s it! No more. I also make a point to, if I can, only shop for one person at a time so I don’t take any money designated for Uncle John to spend on Aunt Jane. It takes a little longer to shop, but it ensures I am not overspending or overdoing it.
In the future, if you see something on sale that you know someone will like as a gift at a later point, buy it then. However, make sure that purchase works for your budget at that point. By stretching your spending out over a longer period of time your budget takes less of a hit overall. Additionally, make sure you register to attend Housing and Credit Counseling’s event Holiday Spending Webinar on Tues, Nov 17 at 6pm. Register to get the Zoom link.
End of the Year Finances
The end of the year is a great time to take stock of your money. Take a look at your overall budget and review your money goals. Evaluate what worked and what didn’t. Think of what you’re doing as an inventory. Look at your short and long term goals – are you on track or do you need to make adjustments? Also think about your taxes. If you’re able to print your end of year bank statements you can start putting together your tax documents.
Check your credit score. You can do this more than just once a year – it doesn’t hurt it to do a “soft inquiry” periodically. You’ll notice something called a “hard inquiry” if you’re applying for some type of credit – those can impact your score. Knowing your credit score can also motivate you to work at credit card payments and improve your score if you know you’ll be applying for credit in the near future. When you look at your credit information, check how close you are to paying anything off. There’s a popular method of payment called a debt snowball that can help you figure out how to most effectively pay off your creditors. A great local option to examine your credit and money management is through Housing and Credit Counseling Inc.
Long Term Money
Think about any money going toward retirement, 401k, emergency funds or savings. If you don’t have a savings account or any money set aside in case of emergency that’s okay. Consider starting one in the new year. There’s no required amount to do this. You can put as little or as much as you can toward protecting yourself down the road. Even $1 per week is better than nothing in an emergency. If you operate on a cash-only system, consider creating a jar or envelope that is dedicated to that emergency or savings fund.
Your Money Matters
We all work hard to earn our money. It’s important to take a breath and know that there are resources to help you manage it. They are designed to help you stay on top of your money and not get trapped by financial problems. First, consider taking advantage of a new program run by the City of Topeka in partnership with HCCI designed to help you navigate your money. It’s free and done over the phone.
Secondly, consider registering for any of the free montly webinars hosted by HCCI Nov 30, 2020, to May 24, 2021.
Check out these great reads for more money information!