The holiday season is filled with giving and celebrating, but it can also bring unnecessary financial stress that can linger long after the photo album is filled and the decorations are put away. Here are a few simple tips to help you avoid some of the most common holiday spending blunders and put your financial house in order before for the New Year. o Set a holiday budget and make a gift list. Setting a budget will only work if you do it before you begin your significant holiday spending. Once you know how much your budget can bear, make a list of gift recipients and entertaining expenses before you start spending. o Start early and bargain shop. More time to shop means more time to find good deals on merchandise. If you are afraid that you can’t resist temptation in the stores, shop online or purchase gift certificates. o Be smart with credit cards. If you’re using a charge or credit card for some of your purchases, make smart choices: stick to your budget, use a card with a rewards program and one that offers retail protections. An easy way to avoid unmanageable credit card payments is by not charging more than you can afford to pay off, based on your budget. Generally, the best use of debt is to finance things that will gain in value, such as a home, an education, or big-ticket necessities that will still be around when the debt is paid off. o Avoid ending the year in bad financial shape. Make sure your wallet is in shape this year, because price hikes are expected next year in many areas of your life including home insurance, car insurance, health insurance, heating costs, interest rates, college costs, and state and local taxes. Furthermore, start saving for next year’s holiday budget right now by depositing a small amount each month in a separate, interest-earning savings account. o Do tax planning before the end of the year. There is still time to shave some dollars off your 2003 tax bill. For example, by deferring income at the end of the year, you may be able to postpone paying taxes until next year. Accelerating interest and tax payments before Dec. 31 also can result in additional deductions for the interest paid this calendar year. Finally, be sure to consult a qualified financial advisor to help you with your holiday spending and saving strategies, credit card management and tax planning as part of your comprehensive, long-term financial planning strategy. This column is provided for informational purposes only. It is intended to be generic in nature, and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or financial advisor. The views expressed may not be suitable for every situation. Bruggers, Lawrence & Associates is a financial planning division of American Express Financial Advisors. American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.
