Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting and investing. As the calendar speeds toward the holiday months, now is the ideal moment to put this literacy to good use. By starting your financial planning early, you can ensure that the festivities don’t strain your bank account and start the new year on a sound financial footing.

The cost of delayed planning

Procrastination is often the enemy of our financial health. Many of us have fallen into the trap of pushing off our budgeting efforts until the last minute. By December, this can lead to rash spending, last-minute purchases and a heavier reliance on credit. This hasty spending can mean starting the new year with an unwelcome debt hangover.

Advantages of planning ahead

1. Avoiding the December Rush: With a clear financial strategy in place, you can make purchases steadily over the next few months, avoiding the December rush and potentially benefiting from better deals outside peak shopping times.
2. Clear Financial Objectives: By understanding your spending limits, you can prioritize gifts, travel and other holiday expenses accordingly.
3. Reduced Stress: Money woes can be a significant source of stress during what should be a joyous time. Early planning can remove much of this financial anxiety.
4. Opportunity to Save: With a clear budget set months in advance, you can set aside a small portion of your income each month dedicated to holiday spending. This way, the impact on your finances feels incremental rather than sudden and overwhelming.

Steps to get started

1. Forecast Your Expenses: Create a list of all anticipated expenses for the holiday season. This includes gifts, travel, meals, decorations and any other traditions you uphold.
2. Set a Budget: Determine a reasonable budget for each category of expense. Remember, it’s not about how much you spend but the thought and effort you put into your celebrations.
3. Start Saving Now: If you haven’t already, open a dedicated savings account for holiday expenses. Deposit a portion of your income or any extra earnings into this account.
4. Educate Yourself: Financial literacy is an ongoing journey. Familiarize yourself with budgeting tools and apps that can help you track your spending and saving in real-time.
5. Be Deal-Savvy: Keep an eye out for deals, discounts and cashback offers. Shopping during sales or using discounts can make a significant difference in your overall spending.
6. Re-evaluate and Adjust: As the months progress, revisit your budget. If you find you’re saving more than anticipated, you can adjust your budget, or, conversely, if you’re falling short, you might need to re-evaluate your planned expenses.

The holiday season is a time of joy, celebration and togetherness. However, without proper financial planning, it can also be a source of stress. Financial literacy, when put into practice, can transform this period from a potential monetary pitfall into a time of well-managed abundance. By starting your holiday financial preparations now, you give yourself the gift of peace of mind, ensuring that when the festivities begin, your focus can be on family, friends and the joy of the season, rather than on your wallet.

Tawonda Burks

ELOCINA 

www.elocina.com