Tuesday, November 9, 2010

Essay on Financial Literacy: Heady Hints to Heed for the Holidays

Even in Southwest Georgia, we can see the changing trend in our weather.  The Georgia heat is subsiding; the landscape is slowly transforming from brown to bare; and the short-sleeved shirts are being traded in for sweaters.  It must be time to bring out the red and green and celebrate the birth of Christ.  As Christians, we understand how the spirit of Christmas encourages us to give.  It is my belief that we receive more blessings when we give, but it is important that our giving comes from our personal sources of income, rather than through debt.

We want to express our love and gratitude to our friends and families and that is through our gifts.  When thinking about our spouses, children, relatives, and close friends, it is natural to shower them with clothes, jewelry, toys, and money.  Nothing is more joyous than gathering around family and opening up large quantities of presents.  We draw satisfaction from seeing the bubbling excitement from a child; catching the gaze from a loved one who received just what they wanted; and the sincere hug from a friend that treasured the special thought.

While it is important that our expressions of love through gifts continue, we need to ensure that they come from our savings and not debt.  We must recognize that when we are using our credit card that we are actually using someone else's money and not ours.  Credit cards are not money, but simply a loan from a financial institution that will expect their principal and interest over time.  That is a recipe for killing future wealth.  Rather than pursuing that road, we should be drawing down from our savings account that we have accumulated through pursuing practical budgetary practices.

You will need to establish a plan of action first before heading to the mall.  I recommend using this Holiday Spending Survival Guide from Practical Money Skills, which is a free resource to help you determine your spending limits and other holiday spending tips. They suggest that you side aside no more than 1.5% of your annual income toward gifts.  If you go beyond that, then it is recommended that you pursue a long-range plan of savings that should extend through the whole year.  Regardless, you need to see specified limits and not go beyond them.

If this has been a tough year and income is tight, then you will want to be creative.   This might mean investing your time and talent creating a gift, rather than going to the store.  You might be surprised by how well it will be received by others.  If you need ideas on where to start, then I recommend using either Instructibles or Craftzine.  Another idea is to either buy gifts as a group or form a circle of family members where each member is responsible for buying a gift for just one member of the circle.  Lastly, I recommend searching online to find special deals.  Common sites can be found on Yahoo Shopping, Overstock, and PriceGrabber.

Finally, recognize that the holiday season is supposed to be time for relaxation and fun.  By applying good saving methods and taking advantage of the right resources, you will be able to spread the love without the headache of crunching debt to start the new year.  Smiles will be more plentiful and relationships will be strengthened.  Let's all look forward to a Happy Holidays and a stress-free New Year!

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