Stay the Financial Course Through the Holiday Season

The end of the year holiday season can be filled with joy and anticipation, but it can also come with some financial stresses, even for physicians. For those on a budget, holiday expenses such as throwing a lavish gathering or giving your teenage child that brand new Lexus with a big red bow around it can thrown things out of whack. One way to reduce holiday-related stress is to have a holiday plan and stick to it. Here are some tips for holiday shopping that won’t get you off track.

1. Rewind and review

Part of knowing where you’re going is knowing where you’ve been. Take a look at last year’s November and December credit card statements to get a better sense of what you actually spent, and compare it to what you plan to spend this year. Did last year’s Santa impersonation leave you cutting back on retirement savings, or scrambling to pay off debt early in the new year? Are there steps you can take this year to prevent the same?

Many budgets lose their effectiveness by taking into account the big things like the mortgage and car payments, lingering medical school debt, and other big-ticket items, but leaving “miscellaneous” expenses lumped together into a confusing mess. Holiday spending isn’t exactly “miscellaneous,” though. You do it every year, and you can quantify it. Measure it, estimate it, and incorporate it into your budget.

2. Start planning early

This past weekend, I took my kids through an emptier-than-expected mall. One national retailer, though, had late-December lines snaking through the store to the registers. That was because the retailer was running an “entire store on sale” promotion, with steep discounts on clothes and accessories. These types of promotions are very common; you just have to keep your eye out. And you need to know what you need. Ask early and often for Christmas lists, sit down with your family members, and map out a holiday shopping plan. You’ll get the triple benefit of avoiding the late December crowds, taking advantage of early sales, and crossing off many of those on your list before you even have to stress about the internal temperature of that turkey.

3. Consider gifts that can’t be wrapped

A short while ago, I wrote about some non-traditional giving ideas for doctors. The holiday season is a great time to think about starting a 529 College Savings Plan or a life insurance plan for a child or a grandchild. It’s a gift that won’t be played with right away, but it’s one that may make a huge difference in the recipient’s life. Most importantly, it’s a gift that, when the recipient is older, will be appreciated beyond the latest electronic gadget.

4. Use debt sparingly and wisely

As always, taking on unexpected debt can not only lead to expenses that magnify through interest, but it can take funds away from investing for your retirement. If you already have a heavy debt load, consider scaling back the gift-giving season, starting the shopping early and paying only in cash, and adjusting your budget accordingly.