We’re nearing the end of 2022, and if you’re like many, it’s your favourite time of the year.
The holiday season is in full swing and there’s quite a bit going on. You’re making plans to spend time with friends and family, devoting countless hours online and in stores to find the perfect gifts for those you love, and eating all kinds of seasonal meals and treats in between.
Although there’s a ton to do and the world seems to spin a little faster this time of year, it’s still important to keep an eye on your finances, too.
End-of-Year Financial Planning Tips
This time of year can quickly become very expensive. As you make your way through the holiday season and break into the New Year, it’s important to remember to keep your financial goals in mind. Below you’ll find some tips to help you manage your end-of-year financial plan, while setting the stage for a financially stable 2023.
Tip #1: Create a Budget & Stick to It
No matter what time of year it is, it’s important to create and stick to a budget – it’s like a roadmap for spending and saving.
During the holiday season, it’s actually best to create two separate budgets. Let’s dig in:
Create an Overall Budget for the Year Ahead
Your overall budget is likely to be different in the year ahead than it was this year. The current (December 2022) Canada Inflation Rate is 6.9%.
With inflation, holiday bonuses, possibly a raise – you will need to consider how these affect your overall budget and create a new one for 2023.
Create a Holiday Budget
A holiday-specific budget will compliment your overall budget. Let’s say you have $2,000 you’re able to comfortably spend this holiday season. Think about how you will allocate that $2,000 across all your holiday expenses. Consider expenses such as:
- Meals: Even if you don’t personally cook and host a holiday meal, chances are you’ll bring something to one, or at least indulge in some extra holiday treats! Who doesn’t??
- Travel: You’ll likely spend money on travel accommodations to see friends and family you may not get the opportunity to see often, or require additional gas to make those longer drives. If you’re hosting guests, take into account what you may need for them.
- Gifts: It’s wise to determine who you’re giving gifts to before you shop. Once you know who you’re buying for, think about your budget and set a limit for how much you’ll spend on gifts for each person.
Stick to Your Budget
We often create a budget with all the best intentions; however, the difficult part starts once all that’s in place. In some cases, you may need to be willing to make small lifestyle changes to achieve your long-term goals. Here are a few tips to help you save money to meet your budgeting goals:
- Cut your eat-out days by at least one per month: Preparing a meal at home costs only a fraction of what it costs to have a meal at a restaurant.
- Cut the cord: Stop paying over $100 a month for cable and take advantage of streaming providers to cut your home entertainment costs in half.
- Make your own coffee: The average cup of coffee costs close to $3 at a coffee shop, but only around $0.24 if you make it at home. If you drink one cup per day, you can save up to $74 per month by making your own!
If you take advantage of all three tips above, you could add $135 to your budget each month!
Tip #2: Use Your New Year’s Resolution to Bolster Your Savings
The New Year is an exciting time, and many of us celebrate by making a New Year’s resolution having to do with personal goals for the year to come. New Year’s resolutions can be great opportunities to bolster your savings account. Consider using a savings challenge as your resolution! Here are just a couple of popular money-saving challenges you might like to try:
The 52-Week Money Saving Challenge
Save $1 in the first week of the year. Every week, increase your savings goal by $1. If you complete this challenge, you will have saved $1,378 in 2023!
If you’re concerned about making larger savings contributions during the holiday season, consider doing the challenge in reverse. Start by saving $52, and reduce the amount of money you save weekly by $1 to create a smaller savings obligation toward the end of the year.
The $20 Savings Challenge
This one’s pretty simple. All you need to do is save $20 per week, every week in 2023. If you complete this challenge, you will have saved $1,040.
Tip #3: Think About What’s Coming in 2023
2022 is almost in the rear-view, so it’s important to start planning for 2023. In particular, think about any potential major expenses you may encounter in the year ahead. Ask yourself these questions:
- Do I plan on buying a new home or doing any renos?
- Is 2023 the year for a new car?
- Are there any signs that a mechanical breakdown may be in the future?
- Will I further my education in 2023?
- Do I have a comfortable amount in emergency savings to cover unexpected costs?
If you do have any foreseeable expenses, it’s time to plan for them now (along with putting money aside in an emergency fund for any unforeseeable ones). A simple way to do this is putting aside small amounts each paycheck to ensure you have it when you need it.
Next month, we’ll talk about planning for your 2023 financial journey in more depth, so stay tuned. While you wait, get in touch with Steven for your free financial services consultation if you need help as you plan to achieve your financial goals.
Have a wonderful holiday season!