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Finding Financial Peace During the Holidays

Savings StockingThis time of year always goes by the fastest--it feels like just yesterday I was carving pumpkins and now I’m counting down the remaining shopping days until Christmas. This time of year also can be the most difficult for sticking to a budget established months ago. Even with the economy still struggling, total spending over the four-day Thanksgiving weekend reached a record $52.4 billion, up 16% from $45 billion last year, according to a survey by the National Retail Federation released the Sunday after Thanksgiving. Holiday indulgence is impossible to avoid, but peace and understanding may be the best gift you can give to others and yourself.

Teaching children financial lessons is important throughout the year, and the holidays present a perfect opportunity for learning. A friend of mine told me about how her parents used to give each child a set amount of money—about ten dollars—to spend on gifts for everyone. She said that it taught them to carefully think through how much they wanted to spend on each person for whom they wanted to buy a gift; it also made them think through their gift recipient list. This simple exercise incorporated the basic concepts of prioritizing and budgeting.

As an adult child, I learned the importance of holiday budgeting, as gifts for my family have always been the largest part of my year-end budget. Several Januarys ago, after the Christmas tree was down and the post-holiday glow wore off, the reality of my Christmas spending hit me all too hard when the bills came due. While there is joy in finding and giving the perfect present, taking months to pay it off quickly replaces the memory. As it turns out, my brother and I found ourselves in the same situation. So, the next Thanksgiving, when we all gathered together, we discussed how, as a family, we wanted to celebrate Christmas. My parents, who are near retirement, agreed that spending less on gifts, yet spending more time together, was what they really wanted from us. Fast forward…my holiday gift budget is now less than half of what is was several years ago, my mother finally received the watercolor she wanted me to paint for years. In addition, I received my all-time favorite gift: 2 mix CDs of songs selected by my brother which hold memories for us, perfectly timed to be the best workout music. These days I start the New Year off without carrying over the previous year’s holiday spending, and my year-end stress has (almost) vanished.

How do you maintain financial sanity this time of year?  What advice do you give your friends, family and clients? What creative ways do you have for teaching children financial responsibility around the holidays?

Melora C. Heavey, AICPA Staff. Melora manages the CPA profession’s volunteer effort, 360 Degrees of Financial Literacy, and the award-winning public service campaign, Feed the Pig.  She serves as the staff liaison to the National CPA Financial Literacy Commission, the leadership body and primary spokespeople for 360 Degrees of Financial Literacy.

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