The holiday season is undoubtedly the most wonderful time of the year, filled with festivities, joy, and a little extra spending. As we approach the holidays, it’s essential to find a balance between enjoying the season and managing your finances responsibly. Let’s explore how to plan for the extra spending during the holidays, with a special focus on credit utilization and the valuable lessons we can learn from the Credit Yetti on responsible credit card usage.
But before we dive into the financial aspects, it’s crucial to acknowledge that the holidays are a time for celebration and creating cherished memories with loved ones. However, these celebrations often come with a price tag. According to the National Retail Federation, Americans spent an average of $997.79 per person during the 2020 holiday season. To ensure you can enjoy the festivities without the burden of overspending, you need to plan wisely.
Budgeting for the Holidays
Set a Realistic Budget: Begin by assessing your current financial situation. How much can you comfortably allocate for holiday expenses without straining your finances? This amount will be the foundation of your holiday budget.
Our friendly yeti mascot has some lessons for responsibly using credit cards and holiday spending.
Make a List and Check It Twice: Create a list of all the holiday-related expenses, including gifts, decorations, travel, and entertainment. Assign a specific budget to each category and stick to it.
Track Your Spending: Keep a close eye on your expenses throughout the season. There are various apps and tools available that can help you monitor your spending and stay within your budget.
Don’t forget, if you need help with holiday budgeting reach out to us for a free Discovery Consultation or contact your consultant!
The Credit Yetti’s Wisdom
Lesson 1: Avoid Overspending
Credit cards can be convenient during the holidays, but it’s essential to remember that they are not free money. Overspending on your credit card can lead to high-interest charges and long-term debt. The Credit Yetti advises you to stick to your budget and only charge what you can afford to pay off when the bill comes due.
Lesson 2: Watch Your Credit Utilization
Credit utilization is a critical factor in determining your credit score… in fact 30% of your credit scores are based on your debt utilization. It’s the ratio of your credit card balances to your credit limits. To maintain a healthy credit score, we recommend to keep your credit utilization below 20% per card. Be mindful of your credit card balances during the holidays and avoid maxing out your cards.
Lesson 3: Pay Your Bills on Time
Late payments will negatively impact your credit score! The Credit Yetti always emphasizes the importance of paying your credit card bills on time, especially during the holiday season when it’s easy to get caught up in the festivities.
After the Holidays
As the holiday season winds down, it’s time to take stock of your finances and credit card usage. Here are some post-holiday tips:
Review Your Statements: Examine your credit card statements to ensure all charges are accurate. Report any discrepancies to your credit card issuer asap.
Create a Debt Payoff Plan: If you’ve accumulated credit card debt during the holidays, create a plan to pay it off as quickly as possible.
Monitor Your Credit Score: Keep an eye on your credit score to see how your holiday spending may have affected it… and always use a trusted credit monitoring service like Identityiq!
If you want help creating your holiday budget or find yourself in a sticky situation after the holiday season and need help creating a debt payoff plan the Credit Yetti is always here to help! Feel free to visit our “Contact Us” page to set up a free Discovery Consultation or reach out to your consultant.
The holiday season should be a time of joy and celebration, not financial stress. By planning your expenses carefully, heeding the advice of the Credit Yetti, and monitoring your credit utilization, you can enjoy the holidays without compromising your financial well-being. Remember, responsible financial choices during the holidays can have a positive impact on your credit score and set you up for a prosperous new year.
