According to a recent T. Rowe Price survey, more than 50% of parents will aim to get everything on their kids’ wish lists this year. Many of these parents will be paying for these gifts for months, or even years, afterward.
There’s a better way, and it’s simple: Create a budget, and make informed decisions about your spending before you hit the shops.
Short-term effects
Tipping your budget just a bit every once in a while isn’t a disaster. But the spending hangover many parents face after holiday shopping is too large to be easily forgotten.
Over half the parents surveyed will pay for their holiday gifts with credit cards. Just 61% of them plan to pay off their spending within three months, and 16% say they will pay it off over the course of six months or more. That’s half a year spent catching up on holiday spending!
If you want to use a credit card for holiday shopping, consider applying for the MCCU Visa® Platinum Card. When you apply by December 31, 2018, you’ll enjoy a low introductory rate for 20 months, plus there is no annual fee. That means you may be able to pay down the balance faster.
Long-lasting effects
Eleven percent of parents use money from their retirement accounts, 14% have taken funds out of their emergency savings, and 11% have taken out a payday loan.
While their kids may be delighted with their loot, parents can be paying for it for longer than they think.
Taking money out of a retirement account or taking out a payday loan can be an expensive option. With tax penalties and extraordinarily high interest rates, you’ll end up paying more than you bargained for.
Be proactive
Try saving up for the holiday season throughout the year. While it may be too late for this year, it’s never too early to start thinking about next season. Consider opening up a separate savings account for the holidays, and put money aside each month!
Be an informed shopper this holiday season, and your decisions will pay off in more ways than one.
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