By Joel Chouinard, ChFC®

November 21st, 2024

The holidays are a time for joy, family, and celebration. But if we’re being honest, they can also be a source of significant financial stress for young attorneys. Between buying gifts, traveling to see family, and hosting gatherings, it's easy to overspend and start the new year on a bad foot financially. As a young attorney, your financial health is crucial, especially in these early years of your career. You're likely juggling student loan repayments, building your emergency fund, and perhaps even saving for a down payment on a home. The holidays shouldn't derail your progress!

Don't worry, though. With a little planning and mindful spending, you can enjoy the holidays without breaking the bank. Here are five tips to help you stay on track.

 

1. Craft a Holiday Budget (and Actually Stick to It!)

The foundation of responsible holiday spending is a well-defined budget. This isn't about depriving yourself. It's about making conscious choices. Start by listing all your anticipated holiday expenses: gifts, travel, decorations, entertainment, charitable donations – everything in addition to your normal budget. Next, compare your holiday spending with your existing financial obligations (i.e., your current budget). The goal is to determine how much you can comfortably allocate to holiday spending without compromising your other financial goals. Don't just create a budget and forget about it. Actively monitor it throughout the holiday season to ensure you stay on course.

If you’re a big holiday person, and you know you’re going to bust your budget each year, skip to the bonus tip below.

 

 

2. Secret Santa or Gift Exchanges

Consider organizing a Secret Santa or a gift exchange among friends or family to reduce the number of gifts needed. This can be a fun way to save money while still enjoying the spirit of giving. Set a price limit with which everyone is comfortable, and draw names randomly. This way, everyone receives a gift, but you're not obligated to buy something for every single person.

My wife and I do this with our extended families, and it’s honestly been a great experience both from a gift-giving and gift-receiving standpoint. On one hand, you don’t have to worry about trying to figure out what everyone in your family wants. This will save you a ton of time, especially during this busy time of year as you try to hit your billable hours’ goal. On the other hand, because you’re only buying a couple of gifts, you can set the price limit higher, which allows you to buy (and receive) nicer gifts. Not that price determines how nice the gift is, but you get the point.

 

 

3. Plan Ahead and Shop Early

You know what they say: the early bird gets the worm. And often the best deals, too! Last-minute shopping often leads to impulsive purchases and inflated prices. Start your holiday shopping early to take advantage of sales and avoid the stress of rushed decisions. Create a gift list with a price limit for each recipient. Consider alternatives to traditional gifts, such as DIY presents, experiences, or charitable donations in someone's name.

You can also leverage technology to your advantage. This is very “Millennial” of me to say, but you can use AI to help you find gift ideas. I used ChatGPT to help me create a list of holiday presents for my wife, and I was pleasantly surprised. Start by giving the chatbot some context about your gift recipient (age, hobbies, profession, style, etc.). Then, give the price range that you’d like to spend, and voila! You have a list of perfect gifts that won’t bust your budget. From there, you can use good ole’ Google to shop for the best deals and sign up for price alerts.

 

4. Prioritize Experiences over Material Gifts

Think beyond the "stuff" and consider gifting experiences. Memories last a lifetime and often create stronger bonds than material possessions. Instead of another sweater or gadget, consider a weekend getaway, concert tickets, a cooking class, or even a staycation, which can be unique and meaningful gifts and also create memorable experiences.

As parents, we may think our kids want toys and other material things because that’s what all their friends get. But I bet when they’re older and they reflect on their childhood, they won’t remember any of the material gifts, only the shared experiences with their family.

 

5. Don't Lose Sight of Your Long-Term Financial Goals

The holidays are a time for celebration, but don't let them derail your long-term financial goals. Continue contributing to your retirement accounts, keep up with debt repayment plans, and maintain your regular investment contributions. Automating these processes can be incredibly helpful during this busy time of year. Remember, a little financial discipline during the holidays can set you up for greater financial security in the years to come.

For most Big Law attorneys, the holidays are often associated with a year-end bonus. By the time you’re reading this, you should have a decent idea of what that bonus will look like, so you can use it to catch up on some of your long-term financial goals if the holiday season derailed your budget. Here are some areas on which you can focus with your bonus:

• Pay off high-interest debt like credit cards.
• Pay down your student loans.
• Replenish your emergency fund.
• Max out your 401(k) plan.
• Fund your Backdoor Roth IRA.
• Fund your holiday fund for next year (see bonus tip below).

 

Bonus Tip: Start Saving Early for Next Year

One of the best things you can do is start saving for next year's holiday season right away. If you know the holidays always set you back financially, set up a dedicated savings account and automate regular contributions to ensure you have funds available when that time rolls around again next year.

 

Final Note

Let's be real, nobody wants to start the new year with a credit card statement that resembles the national debt. The holidays are a time to enjoy with loved ones, not a time to stress about finances. By implementing these tips, you can navigate the season with greater financial peace of mind. Remember, the most valuable gifts are often the intangible ones: time spent with loved ones, acts of kindness, and shared experiences. So go ahead, spread some holiday cheer without emptying your wallet. Happy Holidays!

 

SharpEdge Financial LLC is a registered investment adviser registered with the State of Texas. Registration does not imply a certain level of skill or training. The views and opinions expressed are as of the date of publication and are subject to change. The content of this publication is for informational or educational purposes only. This content is not intended as individualized investment advice, or as tax, accounting, or legal advice. Although we gather information from sources that we deem to be reliable, we cannot guarantee the accuracy, timeliness, or completeness of any information prepared by any unaffiliated third-party. When specific investments or types of investments are mentioned, such mention is not intended to be a recommendation or endorsement to buy or sell the specific investment. The author of this publication may hold positions in investments or types of investments mentioned. This information should not be relied upon as the sole factor in an investment-making decision. Readers are encouraged to consult with professional financial, accounting, tax, or legal advisers to address their specific needs and circumstances.