Council Post: Six Financial Habits To Avoid During The Holidays

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CEO and Founder plinkito, the only savings app of its kind that pays users to learn about finance and savings.

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Believe it or not, the holidays are a great time of year to check on your personal finances.

That’s because as the holiday season progresses, expenses tend to increase. Once many people start spending big money on gifts, decorations, food and everything else that makes this time of year so great, it’s hard to maintain good financial habits.

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Before the holiday spirit completely gets over you, let’s identify the financial habits that can be damaging to your holiday season — and beyond — if not addressed. Here are six of them:

fail to set aside money from each paycheck

It’s easy to lose track of how much you’re spending with each paycheck, especially during the holidays. If you reach the end of the month and often wonder where your paycheck went, you’re not alone.

On average, Americans are spending around $800 more per month During this time compared to last year, when much of the country was locked down. Naturally, spending more means saving less, which can be quite counterproductive in case of unforeseen emergencies. According to a recent survey, half of American respondents have Less than $250 left per month After accounting for essential expenses and routine expenses.

How much should you put away each month? This is a difficult question with many possible answers depending on your circumstances. Some people try to follow the 50/30/20 budgeting rule, which is 50% needs, 30% wants, and 20% savings.

But if that goal is huge, start small. Setting aside a little bit from your paycheck is better than saving nothing. The most important thing is to choose a number and save consistently.

Unexpected save not saving

And speaking of savings, is there a better feeling in the world than budgeting for something (like a Christmas gift for a loved one), then getting it for less than the amount you’ve allocated? The feeling is so great that the first thing you want to do is spend those savings on unnecessary or unnecessary things for yourself, right?

Instead, when you’re given a pretty unexpected gift, put those extra dollars into your savings or retirement account — even if it’s a small amount. Every bit counts when you’re striving toward a financial goal, and it’s not a bad thing to make a habit of regularly putting aside extra money when you achieve it.

spending it without knowing where your money goes

If you don’t know where your money is going, it’s impossible to know exactly how much you’re spending.

Along with keeping track of how much you’re spending, the best way to know where your money goes each month is to create a monthly budget. The average American family spends around $1,900 per month On bills alone, so it’s important to know how much money you have left each month after paying the bills.

There are tons of apps and software suites that can help you chart a budget that works for you, considering your monthly income, bills you might be paying, expenses you might have, debt you might have, etc. Huh.

Keeping a high balance on your credit card

A high balance on your credit card has a negative impact on your credit score as it increases your credit utilization ratio. This ratio reflects the amount of available credit you are using, and According To Experian is the second most important factor in your credit score.

As a general rule, try to use less than 30% on personal accounts, and overall if you have multiple lines of credit. Staying above that 30% will not only rapidly drop your credit score, but you’ll also drive up interest, which will make paying off your debt even more difficult.

American Bankers Association suggests the following For those struggling with credit card debt: Pay off as early as you can, and always pay by the due date. And don’t forget, the interest earned can make you exceed your credit limit.

living beyond your means

If you’re struggling to save money or keep a low balance on your credit card, it’s important to make sure you’re not living beyond your means.

If you’re spending more than you should, you’re potentially racking up some damaging debt. If so, consider trying the following:

• Stop using credit card and start using debit card/cash.

• Make a monthly budget as mentioned above.

• Cut down on extravagant purchases including dining out, streaming services, and more.

One of the best ways to ensure that you stay within your budget is to look at the Buy Now, Pay Later (BNPL) concept very carefully, especially during the holidays.

Buy now, pay later can be dangerous

BNPL, i.e. splitting a transaction into multiple equal payments at the time of purchase, has become a popular checkout option for online shopping, travel and other e-commerce routes. Just Ask Payment Platform Stripe, Who recently announced a partnership With delayed payment provider Klarna to bring BNPL capabilities to millions of merchants in 20 countries.

But the popularity and convenience of BNPL does not mean that it lacks potential pitfalls.

Failure to pay the full bill for purchases in advance gives shoppers the illusion that they have more money than they actually have. In fact, 31% of BNPL users consider their financial health to be “severe” or “struggling”.

Since some BNPL plans may charge interest and late fees, overspending can lead to major damage to the credit score due to exorbitant late fees, rising debt and default in payments.

Instead of getting into the habit of shopping now and paying later, you might consider saving now and buying later. It is much better for your financial health.


Businesshala Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. am i eligible?


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