4 Tips to Help You Stick to Your Budget This Holiday Season

By Ann Arceo, AAMS®

While some of us may not feel like celebrating this year, others may feel like the holidays need to be extra special. In our household, we’re not spending on travel, but our gift list is longer because we want to send more presents to friends and family we won’t see in-person. We also bought some new decorations as we wanted the house to be festive while we’re spending more time at home. It can all add up to a lot, and the excitement of a new year can quickly be ruined by a large credit card bill from your December shopping spree. 

Here are a few quick tips that we’re following to manage our holiday budget:

Making a List & Checking It Twice

The first step in making a holiday budget is knowing how much you have to spend. This should ideally be cash savings and not credit cards. If you find you’re short on cash, you should consider setting up a savings account next year and contributing a small amount to it each month. Once you know how much you have to spend, the next step is to list your expenses including the gifts, decorations, wrapping paper etc. that you need to buy. If you’re over budget, then you may need to decide what you can cut such as reusing the decorations you currently have and checking out the dollar store for wrapping paper and gifts bags. 

Host a Virtual Secret Santa

My husband’s family lives out of the country so we won’t get to see them this holiday season. We decided to draw names so we could focus on buying one nice gift instead of gifts for everyone. We’ll buy it online at stores that offer free shipping and then host a Zoom party to open presents together. It’s not the same as seeing each other in-person, but we’re so grateful for technology during this time. 

Send a Treat While Also Supporting a Local Business

This year has certainly been hard for many local businesses who have had to face closures and other restrictions. Check with local restaurants, bakeries, and florists to see if they are offering delivery. You could have a meal, dessert, or flowers sent to a friend, neighbor, or loved one that you can’t get together with during this time. You don’t have to spend a lot to send someone a treat that is sure to brighten their day. 

Shop Smart

Online shopping has soared this year. While it’s certainly not the same experience as going to the store, online shopping can help you stick to your budget. It allows you to quickly check products across multiple stores to find the best price. Many stores will give you a discount code if you join their mailing list. You can also take your time and do your research, which can help you avoid buying gifts on impulse. 

The holidays can be a magical time of year, but don’t let the magic hurt your finances. If you plan ahead, make a list, and shop smart you can have a wonderful holiday without overspending. You’ll thank yourself for it in the new year. 

Finding Ways to Save for College

By  Kate Welker, CFP®

It is again the back to school season. Preschool through college school will look different for students this year, but one thing is the same. The changing of the year, feeling of a fresh start, and thinking about the future year ahead. For older students we are discussing college plans and for those of you with young children you may be thinking about planning for your children's eventual college. With a growing student loan debt load in this country how to pay for college is a concern we like to address. I wanted to share some thoughts on a few unique ways to think about saving for education.

Childcare Expenses- If you are paying for daycare or after school programs this is a large expense you are already budgeting for and handling with your current income. Once your children are old enough to not need that expense, convert it and start putting that same amount into their college savings. Depending on the age of children and area you live most people are paying between $8,000 and $15,000 a year for daycare. As that number decreases and then goes away that is a large amount to be contributing each year. 

Side hustle- I've had a few friends recently start a small business on the side and nickname them "college fund" jobs. They are committing to putting all of the earnings from this new venture into college savings. 

Scholarships- This is a huge opportunity for your student to start earning funds for their education. This takes time and diligence on their part, but starting in their freshman year have them look for these opportunities. Have them search out competitions that focus around their strengths such as writing, debate, or technology.

Saving on College- Combined with saving for college consider ways to save ON college expenses. Being aware in advance of the full expenses of an institution along with the scholarship and aid available should make a major impact on your choice of where to attend. If there are scholarships available for a particular GPA or test score that is a goal to work towards. 

There are many other creative ways to fund that education goal. We enjoy working with our clients to find their solution. Once your child is in high school (9th grade is not too early!) we offer college planning services and in depth analysis that will compare college costs, grants available, and the total net cost. Contact us for a consultation! 

Summer Staycation

In Pre-Covid times many of us would be enjoying or planning a summer vacation. I had originally looked at this month and planned to write about summer vacations, saving for them and the importance of enjoying your money and your time. Just as summer plans have shifted, I thought I’d shift to talk about ways to enjoy the opportunities for entertainment and relaxation you can find around you.

This may be your summer to save money. Being forced to stay close to home opposed to taking the big vacation should cost less. You could use those extra funds to put towards another financial goal or take those funds and add to next year’s vacation fund for a bigger dream experience. Even if you did not have a vacation planned it is still summer and you want to take advantage of the weekends.

So what do you do? You have the time off, might be tired of being home after self isolating for months, but still want to maintain social distancing. Following are a list of places to consider exploring, maybe you’ll find a treasure close to home you have experienced before.  I am located in Western, NY so I am going to share some local experiences I have been encouraged to check out. Let me know what you find in your area! 

• State Parks - Last summer I wrote a blog “Summer In the Park” sharing information about the New York State Park system. This is still one of my favorite go to options for an easy, frugal day out surrounded by natural beauty. A quick tip to find a park near you is to use Google Maps. Zoom out and type in the search bar the type of park you’d like to find (local, county, state) and they will be marked for you. 

• Wineries - I am blessed to be in the Finger Lakes region and we have beautiful vineyards. You do not have to be a wine drinker to enjoy this, seeing the operation and following the trails to see the scenery is a fun outing. One excursion in our area is the Seneca Lake Wine Trail, mapping out a journey to follow. 

• Museums - There are going to be more restrictions on visiting indoor locations so I recommend calling ahead to see if you need to reserve a time to visit. In nice weather you can also visit outdoor museums and historical sites. Right down the road from our primary Corning office is the Corning Museum of Glass and The Rockwell Museum of Art. A little further away we really enjoy the Rochester Museum and Science Center. Outdoor sites - Again right in Corning is Heritage Village and a little further away one of my favorite destinations is the Genesee Country Village and Museum. 

• Hiking Trails - Free to explore and likely easier to avoid people! A quick google search should bring up local trail maps. Please be safe and take a hiking partner. The Finger Lakes Trail runs right through my town, there are over 1,000 miles of trails so there are many opportunities to find a small section to hike. 

Use this summer as an opportunity to explore life in a way that may be different for you. See what your area has to offer. With conditions and requirements changing regularly I do encourage you to call or visit the website of where you plan to go beforehand to be aware of any closures or requirements they may have.

This is a summer to reconnect with your local community, and remember Amy’s saying, “Life is about events, supported by your dollars and cents.”

How Young People Can Financially Prepare for Living on Their Own

Guest Post by: Christopher Haymon

If you’re about to move out of your parent’s house for the first time, this is essentially the beginning of your life as an adult. You’re about to discover the independence that comes with making your own decisions and living life on your terms. You’re also about to discover a new world of financial responsibility.

Needless to say, the whole experience can be an emotional roller-coaster. But it can also be your most exciting and rewarding experience yet. Here are some financial tips to help you start your new chapter off on the right foot:

Explore life insurance.

One of the first steps to consider as you prepare to move out is getting life insurance, because it would help your family out significantly in the event that you unexpectedly passed away. When you look at policy options, it’s important to choose one that fits your current lifestyle and circumstances. For example, a 20-year plan may be perfect for you if you:

1. Are on a tight budget

2. Have a significant amount of debt

3. Pay a 20-year mortgage, and/or

4. Have children

If you die, the right life insurance policy will leave your family some capital or cover funeral costs and medical bills.

Save now.

If you start saving money before you move out, you will not only establish the habit, you can begin your new chapter with a safety net. First things first: Get (and keep) a job if you don’t already have one. If you’re not paying for things like rent, utilities or groceries, this is the perfect time to put away the money you make. Open a savings account, put a majority of your earnings in that account, and keep the rest in your checking account. That way, you’re taking advantage of having low expenses but can still enjoy the occasional entertainment or dinner out.

Learn how to budget.

Another way to prepare for moving out is to learn how to create a budget. Knowing how to create and stick to a budget is an invaluable skill that you will probably use for the rest of your life. Sit down with your parents and/or a financial mentor or advisor and learn the basics of calculating your expenses and income. Even educating yourself on the most basic forms of budgeting can help you avoid getting in over your head in debt by your early twenties.

Each time you accrue a new expense (or new form of income), be sure to update your budget and make any necessary adjustments so that you’re still saving money. For example, once you move out, you will be responsible for a wide range of new living costs. Understanding how to plan for these costs will save you a lot of trouble and keep you in a position to succeed.

Start your credit.

Finally, it can also help to start building your credit history before you move out. For one thing, it can be difficult to get an apartment without a credit history, and if you want to fully embrace the independence of moving out, you may not want to rely on your parents to cosign the lease. Establishing a credit history is also important if you ever want to purchase a car or get approved for a credit card with a higher limit. If you have a poor credit history, it will likely be difficult to buy a home. Most lenders will require that you have a minimum credit score before loan approval.

Get a secured credit card, make a purchase and immediately pay it off. Then, don’t use the card again until you’re completely confident in your financial responsibility. Another way to start building your credit is to make all your federal student loan payments on time.

When you have a financial plan, you can make the most of the independence and responsibility that comes with moving out. Be sure to check out life insurance policies that can create a safety net for your family. Before you move out, start saving most of your paycheck, learn the ins and outs of budgeting, and begin establishing your credit history. You will have a lot to learn along the way but having an understanding of these essential principles will help put you on a good path.

About Chris

Shortly after I graduated college, I made a lot of financial mistakes. Between a swanky apartment, brand new furniture and tech gadgets to fill it, and a student loan bill I wasn’t prepared for, I found myself in over my head pretty quickly. 

I didn’t mean to be reckless with my money. I just had no idea about the basics of healthy finances, including credit, a debt-to-income ratio, and emergency savings.

That was five years ago, and I’ve learned a lot from my experience. My goal is to help prevent others from finding themselves in a similar situation.

 Photo Credit: Pexels

CARES Act Part 3 - Unemployment Benefits

By Kerrie Beene, CFP® and Amy Irvine, CFP®, EA, MPAS®, CCFC 

Those who are unemployed or cannot work for coronavirus related reasons will be eligible for benefits under the new Cares Act passed on March 27, 2020. 

What is Unemployment?

There are several terms being passed around that all meet the qualifying definition:

1. Termination of employment

2. Layoff

3. Furlough

Who qualifies for the Pandemic Unemployment Insurance?

There are 3 qualifications that must be met

1. Ineligible for any other state or federal unemployment benefits

2. Unemployed, partially unemployed, or cannot work due to the COVID-19 public health emergency

3. Cannot tele-work or receive paid leave

4. Self-Employed individuals who have had to “close their doors” and are unable to qualify for the small business loans offered through the CARES Act

This will include employees who have tested positive for the corona-virus, as well as, those who must leave their job to provide full time care for a family member or other relative but do not have access to paid leave benefits. 

The new law has 2 approaches to assist the normal state-based unemployment programs:

1. A pandemic unemployment assistance program which matches the normal state unemployment rate plus $600 for unemployed workers who would not normally be eligible 

2. An extension of unemployment compensation by 13 weeks beyond the eligibility time states provide under current law

Differences from Regular Unemployment Benefits

Includes workers who are:

• Self-Employed

• Independent Contractors

• Gig Economy Workers

• Those who do not have sufficient work history to qualify for regular benefits

Waiting Periods:

States normally have a one week waiting period and there is now federal financing for states without the waiting period.

Benefit Amounts and Time Frame

The amount varies by state, is subject to a minimum, and is increased by $600 from the Federal Pandemic Unemployment Compensation Program.  

Unemployment benefits are based on prior wages, often on the last 4 quarters. 

If you are already receiving benefits at the state level, the $600 weekly increase will be provided as a supplement.  

Self employed workers will have to have proper work and pay documentation. The benefit amount will be calculated using a formula from the Disaster Unemployment Assistance Program.

CARES ACT Part 1 - Recovery Rebate

By Amy Irvine, CFP®, EA, MPAS®, CCFC
FINANCIAL PLANNER

I started with this section because we feel it is important for our clients to know if they are or are not eligible for this rebate.

Over the weekend, I've noticed a great deal of confusion regarding this provision.  Let's start with what it is.

It is a rebate provided to those with eligible income (see below).  The bill actually uses the language "credit" for the first taxable year beginning in 2020.

What are the amounts?

• $1,200 single

• $2,400 joint return

• $500 per qualified child (under the age of 17)

Who is eligible?  

• $75,000 Single (and in my interpretation, married filing separate, since it states "as not described in paragraphs 1 or 2" listed below)

• $112,500 Head of Household

• $150,000 Joint

• If your income is above that limit, it will be reduced by 5% for each $100 of income over those thresholds.  Complete phase out:

  • $99,000 single

  • $146,500 Head of Household

  • $198,000 Joint

What tax year is this based on?

• 2019

• 2018 if you haven't filed your 2019 tax return

• If you haven't filed, the legislation states that they may use alternative information such as your SSA-1099.

What if my income is more in 2018 and 2019, but less in 2020?

• You will receive the credit when you file your 2020 tax return and benefit at that time.

What if my 2018 income was lower and I haven't filed 2019?

• As noted above, the rebate will be based on your 2018 income. 

• Interestingly, the language seems to read that if your 2019 income would have reduced your benefit, then you won't be subject to refunding the rebate.  

When should you expect to receive the rebate?

• "As soon as possible" is the language used.

• Our guess, Mid-May

Will these checks be taxable?

• No

Financial Planning Strategies for Holiday Spending and Savings

It’s hard to believe that we are already in the holiday season. Christmas is just over a week away so in this week's Monday Morning Quarter-Buck, Financial Planner Becky Eason (who we affectionately call our budget queen) is going to give you a few tips to save money in the upcoming weeks. 

Tip #1
A great way to save some money during the holidays is to wait until a few days after Christmas to have family gatherings. While it may be too late to do this for this year it can be something to keep in mind for future years. You might be asking “how does this save any money?”

Well, if your family does gift exchanges, then purchasing a gift the day after Christmas when retailers usually mark their Christmas inventory to 50% off, will be a very big savings.

Included in the discounts are gift packages, stocking stuffers, wrapping paper and many other little things that you don’t think about but often pick up last minute to fulfill your holiday shopping.

Of course, if you wait until after Christmas to purchase these items there is a chance that the stores will run out before you get there or that you won’t have as good of a selection but you could save a lot of money.

If you aren’t up for taking the risk that you won’t be able to get the items that you really want to gift you can still take advantage of some sort of discounts. You can plan ahead and purchase items for next year, if you have space to store it and won’t forget about the items. Popular items to do this with are decorations, gift bags, wrapping paper, holiday baking pans and holiday clothing. 

Tip #2
This next tip for saving money during the holidays is something that I struggle with, but feel very pleased when I follow my advice. When people say they would rather spend time with you than receive a gift, they probably mean it. It’s nice to both give and receive gifts but after all, aren’t the holidays supposed to be about spending time with those who are close to you?

If you really want to give a gift, try to make sure it’s something that the recipient will actually use and appreciate. And don’t spend money that you don’t have on gifts. All too often we receive gifts and the next year comes around and we realize that we never took the prior years gift out of the box! 

Tip #3
The third tip for saving money during the holidays is on food. We all know how expensive groceries are, especially when we are buying “special” foods for our holiday gatherings. To help spread the cost more evenly among all family and friends consider doing a dish to pass. Not only could this potentially
save you money but it can save a great deal of stress. 

Tip #4
As the holidays come and go, remember to cherish the memories and the time that you have with friends and family.