By Eric Souders, AWMA®, CSRIC®
By Eric Souders, AWMA®, CSRIC®
The approaching holidays mean different things for each of us, but the journey toward the festivities can often be stressful. As January approaches, for some, work can become burdensome as end-of-year goals are pushed forward and prioritized. Gift buying, making travel arrangements, and entertaining family have their own deadlines. This year, factor in the complications of a lingering pandemic and the squeeze of rising inflation, and the stress could be, shall I say, lead us to not be the best version of ourselves.
Reducing stress is always important, but it becomes even more crucial during the holidays when budgets are stretched thin. Money can cause a lot of problems in relationships and there’s no reason to add additional stress during the holidays. Having a financial plan goes a long way toward reducing holiday stress, but you need to remember to take care of your mind and body as well as your wallet.
Financial stress is a condition of anxiety or fear over money concerns and it’s often exacerbated by the holiday season. Anxiety over financial issues isn’t just a mental state either. Physical symptoms can often manifest as well, such as insomnia, headache, fatigue, and weight gain or loss. Additionally, financial stress can make us irritable, depressed, and unsatisfied.
Money is one of the most commonly cited causes of stress in America. But unfortunately, most of us don’t have many options when it comes to increasing income. Unless you can switch jobs, get a raise, or win the lottery, you won’t be able to ease your money worries by bulking up your bank account. Moonlighting might be very popular right now, although finding time for another responsibility around the holidays could create more unnecessary stress. You may want to wait until the new year.
If you can’t increase your income, you only have one other option – spending less. We all probably have the goal of spending less and saving more, but vague goals are easy to put off and forget about. Spending less requires discipline and specificity. You’ll need to create a budget, find areas to cut back, and then stick to your plan. It’s that third part that trips most people up.
The holiday season comes with additional burdens this year. Shortages and supply chain delays will make many popular gift items hard to come by. Inflation will create extra pain at the register for the gifts you can find. You’re going to need a game plan for holiday spending this winter. Here are a few ideas to consider:
– Create a Holiday Budget
First and foremost, you’re going to need a holiday budget. This involves not just a gift list, but food, travel expenses, and items like decorations and cards. Set limits for each category and try to avoid impulse shopping. If you struggle to avoid temptation, take cash with you and leave the credit cards at home when shopping.
– Pitching In For Family Meals
Hosting family for holiday dinners can be a rewarding experience, but cooking all day is taxing and food costs this year are high. One way to lighten the stress load is by asking friends and family to pitch in with a dish of their own. With multiple people cooking and bringing food, you’ll save time and money while also adding a little variety to the meal.
– Consider a Gift Exchange or Pollyanna
Getting a gift for everyone in a large family is a major source of stress. A quick way to break your budget is by feeling obligated to buy gifts for every last aunt, uncle, and cousin. Plus, big families need to coordinate gift buying so no one gets the same thing twice. A pollyanna exchange is an easy way to keep your spending in check while being fair with gift-giving. Everyone draws names, sets a spending limit, and purchases a gift for their specific person.
As the end of the calendar year approaches, you’ll probably have to tie up plenty of loose ends at work. Creating checklists is an easy way to cover your bases and complete your work responsibilities, so why not create something similar for your personal life? You’ll want to create two different financial checklists: one for the end of 2021 and another for the start of 2022.
Getting your finances in order for the end of the year helps at tax time, but also ensures you meet your annual goals. Check off the following items before 2021 comes to a close:
Addressing financial worries is only one part of the process. Physical and emotional health is just as important. Like the financial checklists above, you’ll want to keep certain factors in mind when fighting stress.
Safety has been one of the main themes of American life since the start of the pandemic, but you need a safety net for your finances as well as your health. Protecting yourself and your family from financial stress means saving AND spending must be balanced.
Saving money in an emergency fund is a must for anyone. Having two months of expenses put away in a liquid savings account is a good place to start since you don’t want to be forced to sell invested assets to meet any unexpected expenses. With interest rates as low as they are, the price of liquidity is a minimal return.
Another crucial aspect of financial safety is insurance. Insurance can be a frustrating topic since it can appear confusing, and expensive, yet we hope to never use it. But insurance protects us from accidents, health problems, and the unexpected. Car, health, and homeowners/renters insurance are three must-haves for every individual and family. But you also may want to consider disability insurance if your family would lose income if you lost your ability to work. If you have a family who depends on you for financial security, you can no longer put off getting some form of life insurance. Consult with your financial advisor on the best (and most cost-efficient) ways to ensure your family’s financial future.
The holidays will come and go, but it’s important to manage financial stress at every time of the year. 2022 will be a challenging year of recovery for all of us, but having the right plan and coping skills to manage financial stress can lead to a healthier and happy new year.
Ascendant Financial Solutions, Inc. is an independent SEC Registered Investment Advisory firm serving clients in the Flagstaff and Phoenix, Arizona areas. With more than thirty years of experience in the financial industry, we partner with families, business owners, and retirees to ascend to greater financial heights on their journey to financial freedom. No matter how complex your financial goals are, our team will rise to the challenge to help you meet your goal.