Holiday Retail Trends & Your Budget

In the midst of this holiday season, is your budget holding together? In this blog, we’ll look at the latest holiday spending stats, the most recent trends in giving, and offer a few tips to help you maintain a financially-stress free holiday season. While money is most definitively not the reason for the season, examining current holiday spending trends gives us some insight into the health of the U.S. consumer and might even inspire reflection on our own holiday spending habits.

According to the National Retail Federation (NRF), total U.S. holiday spending will rise about 2% in 2015 compared to 2014. NRF estimates that the average American will spend about $1,017 in holiday-related items this year versus $1,000 in 2014. No surprise that the bulk of spending, or 72% of budgets, is expected to go towards gift-giving. Family still comes first in this category as consumers plan to spend four-times as much on relatives than on friends. Spending on food comes in at a distant second, eating up 12% of the average American’s holiday budget, but arguably a very important piece of the pie. Other must-haves like decorations, cards, and flowers account for the remaining 16% of most Amercians’ holiday spending.

While holiday spending isn’t surging by any means, it’s up significantly from the depths of the Great Recession when the average American spent only $682 in November and December. For the last several years wage growth has been relatively lackluster while consumer debt has inched lower and savings rates have grown. This suggests consumers learned a valuable, if not painful lesson during the financial crisis: moderation. Lower debt levels and more savings are both net positives for economic growth and asset appreciation. These trends, coupled with signs that wage growth is finally starting to improve, suggests healthier consumers in the years ahead. Given that household consumption accounts for 70% of U.S. gross domestic product or GDP, we may be in for more holiday cheer for years ahead.

Now that we’ve covered some stats, let’s talk about gifts! What do family members want from Santa this year? A poll by the National Retail Federation found that our female relatives rank gift cards as their top gift item, followed by clothing/accessories, books, CDs, and DVDs. While men also named gift cards as number one choice, more of them wanted consumer electronics or computer-related products than women. Looking to give something a little more personal than a gift card? Check out Amazon’s most gifted list (www.amazon.com/gp/most-gifted) for a bevy of ideas by category. Some of the world’s largest online retailer’s best-selling gifts this year include the LEGO Minecraft Playset, the “Inside Out” movie DVD, Amazon’s tablet “fire”, and Adele’s latest CD, among others.

Have a twenty-something in the family mix? A survey from Eventbrite suggests that Millennials prefer experiences over things. In which case you might consider a gift card to the spa or tickets to a play or ball game for the young professionals in your clan.

All this gift-giving talk, while fun to think about, can really strain a budget if not carefully considered. While we’re more than half-way through the holiday season, it’s not too late to reassess your spending plan and even start strategizing for next year. If you’re feeling some financially-related holiday strain, now is the perfect time to stop and take inventory. What was your original holiday budget? Did you have one? And how much have you spent on holiday-related items so far?

In order to relieve money stress, the best and only place to start is by honestly looking at your current situation. The key is not to use your predicament as an opportunity to criticize yourself, but as a starting point for improvement in the years ahead. By intentionally setting a limit on the amount you’ll spend on decorations, gifts, food, etc… you’re less likely to overspend and more likely to avoid feeling financially overwhelmed during the most wonderful time of the year. If you’re already over-budget and swimming in financial strain, don’t sweat it! What’s done is done. The best thing you can do is use this as a learning experience for next year and beyond.

With that in mind, I find that planning ahead is often the best way to navigate any budget. Once you’ve determined a comfortable amount that won’t strain your finances – and you can do this as early as January – you’ll have an entire year to purchase thoughtful gifts for family and friends, on your terms. You can take advantage of sales throughout the year or simply be open to discovering the perfect gift for that special someone. By planning ahead and giving yourself plenty of time to find just the right gift, you’ll have more time to enjoy being with family when the holidays finally arrive. Instead of rushing around the mall at the last minute or spending a fortune on over-night shipping, you can relish the charm of the season and enjoy time spent with loved ones.

Good luck! Wishing you a happy and financially healthy holiday season!

Carrie A. Tallman, CFA
Director of Research

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Five Gas Saving Travel Tips for the Holidays

It’s that time of year again- entertaining, eating too much, and lots of travel.  Marshall Doney, AAA president and CEO, stated in a recent press release that over 46 million Americans will journey 50 miles or more from their home this Thanksgiving.  The chart below shows that gas prices are actually in our favor for traveling this Thanksgiving.

Here are five easy ways to save on fuel prices – not just for the holidays, but all the time!

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    1. Drive the more fuel efficient car.  Many people jump to taking the family car with the most leg room and luggage space.  Perhaps take this opportunity to assess your packing and squeeze into the smaller more fuel efficient car.
    2. Lighten the load.  Take an inventory of what’s in your car.  By having a heavier car you use more fuel.  Take off the roof rack that you don’t plan on using this winter and empty out the trunk, leaving only the necessities.
    3. Get a tune up.  Consider getting your car serviced before taking off this holiday season.  The better shape your car is in, the more fuel you will save.
    4. Go back to driver’s ed.  Take this time to remember the basics of driving.  Accelerate slowly, eliminate aggressive braking and speeding.  All of these things lead to increased fuel cost.
    5. Find cheaper gas prices.  GasBuddy is my favorite app for this purpose.  You can use this to find the cheapest prices on your route.

Every penny counts when trying to stick to a budget to meet your long-term goals!

Ashley Gragtmans, CFP®
Financial Advisor

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The Power of Spending Choices

While it’s still well ahead of the official holiday season, a recent email got me thinking about what really drives my spending habits. My sister messaged our family a week ago asking if we were planning to buy presents for the kids this Christmas. I love my nieces and nephews but they are eight in number with at least one more on the way. Buying each one of them a birthday present reflective of their unique personalities is a delight, but as their numbers have grown, holiday shopping has become a little less joyful (‘tis the season) and definitely more stressful.

After the email arrived I knew immediately what I wanted to do – not buy Christmas presents. Only it wasn’t so easy to type those words back. So I waited. Everyone else had responded in the affirmative, but I held back. I felt torn between what I thought I should do and what I knew I wanted to do: enjoy the holiday season with family, minus the gift-giving.

After a little inner conflict and a healthy dose of anxiety, I realized that my desire to not offend, to maintain a magnanimous image, and to avoid the dreaded Scrooge moniker, prevented me from telling my financial truth. I saw that it wasn’t the criticism or praise from others that I was trying to avoid or earn; it was my own inner critic that I was trying to please.

With this newfound awareness, I discovered that not only does this happen at the holidays, but throughout the year! My misguided sense of propriety often influences my spending habits, in a way that is not always aligned with what I really value. Instead, when I notice and promptly ignore my inner critic’s arbitrary rules and demands, it frees me up to spend in a way that’s more aligned with what I really value — like retirement and that future trip to Paris I’ve been planning.

I bit the bullet and told my sisters that I would no longer buy Christmas presents for the kids. It turns out that none of my family criticized me for my decision. This non-reaction was even more proof that my own thoughts and fears – not other people – were behind my financial misalignment.

While some people may not react as well as my family did, when we stop worrying about other peoples’ reactions to our spending choices, they will have less of an impact. We’ll see them for what they are – simply other peoples’ reactions. In the meantime, giving ourselves a break, internally, frees up a lot more clarity to spend in alignment with what feels right. And I can’t think of a better holiday gift!

Carrie A. Tallman, CFA
Director of Research

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Ways to Cut Wedding Costs

I’m getting married this year, and I couldn’t be more excited . . . about getting married, not necessarily about planning the wedding. The process can be stressful and overwhelming – the organization, details, responsibility, and not least of all, cost.

As a financial planner I’ve thought a lot about the cost of this important day. A quick Google search reveals that the average amount of money spent on a wedding in the United States is over $30,000. It’s not like the old days where fathers paid men a dowry to marry their daughters (thankfully). While both of our families are helping us on wedding cost, we still need to pony up quite a bit of cash on our own. I did not want to start off this next phase of my life in debt.

Through my planning I’ve come across a number of ways that people have saved money on their wedding. While I didn’t choose all of these options, I think they’re all worth considering.  If you know someone who’s planning on tying the knot soon, you may want to share these ideas with them: 

  • Cut the guest count.I’ve experienced night sweats on who to invite to my wedding. I wake up thinking: “They invited me;” “She’s my second cousin twice removed;” or “What about my best friend from kindergarten?” A recent survey by theknot.com shows that it costs over $200 per guest at a wedding. That’s right – over $30,000 for just 150 people! Try to limit your guest to friends, immediate family, grandparents, close aunts and uncles, and close cousins. People will understand you can’t invite everyone.
  • DIY.This isn’t for me, but it is for a lot of people. I’m not overly handy or creative, nor do I have the patience for doing anything myself on my big day. However, if you are that type of person, you should do as much as you can on your own. Try printing your own invites and save-the-dates cards. Research sites like Etsy to get ideas. Pick a creative family member to help decorate for your rehearsal dinner; have a girlfriend do your hair. Every little bit that you can do yourself (or others can do) will save hundreds or even thousands of dollars. Maybe a friend’s participation could be given in lieu of a gift.
  • Don’t be so traditional.More of my friends are not getting married on Saturday. In most cases they are moving to Friday and Sunday where wedding vendors and venues don’t charge the same premium as a Saturday wedding. Also, think lunch reception and maybe not a sit-down, four-course evening meal.  Or, you could just do a champagne toast and appetizers and cut out early for the honeymoon 😉.
  • Pick a season and stick with it.Try to purchase decorations, flowers, and food that are in season. If you are trying to get Birds of Paradise or sunflowers in the dead of winter, you will pay for it. You can save a lot by having a Christmas wedding because most venues are already decorated. Another option is to try for a spring wedding when everything outside is blooming. If you are planning your meal options, do a sautéed veggie option with items that are in season.
  • Bundle. Try bundling items to cut down cost. For example, instead of having a cake and party favors, maybe have a candy station for people to grab something on their way out the door. This way, you still have sweets and favors, but you’re cutting the expense down by really having one.  If you have something around the house that you can use as your guest book, do it! I’ve seen people use globes from a bookshelf to sign, as well as old corn hole boards that were painted with the wedding colors.
  • Keep it casual. Buffets may not give the same vibe as a plated meal, but it’s a lot cheaper. If you really don’t want people to wait in line for food, then try doing family style. This is a bit more expensive but doesn’t come with the extra cost of servers.
  • Hire a coordinator.  This goes against the DIY bullet, but you can save money in the long run. Most wedding planners have discounts and perks arranged with partners and vendors… but be wary and do your research before hiring someone to plan for you.
  • Do everything memorable early. Try to get the bouquet toss and cake cutting out of the way early. If you do everything memorable first thing, you can let your photographer and videographer leave early to cut down on their hourly time. Your guests will continue to snap pictures throughout the night.
  • Buy someone else’s wedding. This may sounds crazy, but sadly, many people cancel their wedding every day. Most deposits are already put down and can’t be returned. Decorations have been bought, and gifts have been purchased.  Check out http://www.bridalbrokerage.com/to purchase someone else’s unfulfilled day.

Finally, the number one way to save money… ELOPE! Have a quick wedding, a potluck in the backyard, good conversation and s’mores by the fire, and call it a good day!

Good luck on planning your special day!

Ashley Woodring, CFP®
Financial Advisor

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Starting on the Right Foot

In the spirit of college graduation season, as Milliennials contemplate their careers and financial futures, I thought I’d share a bit of perspective that’s helped me find career contentment and at the same time, put me on a course towards financial independence. While those of you who recently earned your bachelor’s degree (congrats!) may feel pressure to find your life’s calling, as society often tells you you should, I would suggest a different approach. Instead of trying to figure out your purpose or your true career calling, I advocate a low-pressure alternative; something I call “following your thread.” More on that in a bit. In addition to focusing on your career, which is admittedly very important, I would recommend giving some attention to your finances at this point in your life. Even if your income is paltry, carving out just a small amount of time and energy in this area will pay off in spades.

As it turns out, identifying a single line of work that will lead to perfect career bliss is a tall order. As a young college student I didn’t have that hindsight. Had I known to pay attention to the classes that really interested me and followed that thread, I might have arrived at career contentment sooner. While I’m finally happy in my financial vocation, the point is that few of us discover our life’s passion in college. For the rest of us, learning to identify important career sign posts, setting ourselves up for financial success, and tuning into our intuition are much more useful.

My advice to those of you just starting off is to start tuning-in exactly where you are. If you’ve landed your first job, congrats! Now is time to dive into your work and also pay attention to what energizes you and what drags you down. I call this “following your thread”. Move towards tasks that interest and energize you and over time, reduce those duties that sap your energy. While any job will often have some unpleasant assignments, moving towards a better work mix will ultimately lead to greater career satisfaction.

Once you get the hang of following your thread – and it is a life-long process – making a commitment to excellence will take you to the next level. This may sound like a tall order, but I’ve found that it’s not my job that gives me meaning but it’s the meaning I bring to my job that matters. Granted, we’ll fail often (I do regularly), but a commitment to excellence imbues our work and everything we do with meaning and value. This flips the notion that career bliss comes from finding our passion or figuring out what we want to be when we grow up. It seems that working with what’s right in front of us at our current job, digging in, and brining our passion and commitment to our current task is actually what brings lasting career contentment, which overtime should pay off in financial rewards.

And last, but not least, I believe that setting yourself up for financial success is the bedrock of a bright future. Without stable financial footing, including saving regularly for retirement, money stress can hang over the happiest of careers and lives. A stable financial situation can free up your innate creativity, which then helps open you up to new opportunities. It’s a virtuous cycle that paves the way for a rewarding and meaningful life. Where to begin? Start small and simply. Track your expenses and set a reasonable budget that allows you to save a regular amount monthly, but with wiggle room to still have fun with friends and family. The power of compound returns will grow your money significantly over time and can better help you weather market and career downturns. Financial education is key and there are plenty of great financial planning books out there. If you’re not a do-it-yourself-er, consider contacting a fee-only independent financial planner who can help get your started.

Wishing you a bright and fruitful future!

Carrie A. Tallman, CFA
Director of Research

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Using Brief Everyday Moments to Teach Kids about Money

More than once my nine year old daughter has asked “Why don’t you quit your job so you can be home more?” After I remove the knife from my heart, I tell her that we would not be able to afford to live in our house if I didn’t have a job. “Daddy could get a job,” she says. After my stay-at-home husband removes the knife from his heart, he tells her that my job pays more than a job that he could get. These are the few and small lessons we teach our kids about money. I hope they’re enough.

As a working mother with three small kids, and a busy stay-at-home dad, there’s not a lot of time for my husband and I to have protracted discussions with our kids about money. We want to teach our children how to work hard, spend wisely, and value the things they have. But with so little time, I find myself having far fewer conversations about the money than I thought I would before I had kids. I also thought I would never let them eat in the car, but you know how that goes.

Because my time, focus, and patience are so limited, I try to model behavior in my daily actions and conversations. When the kids ask why we can’t have something or do something that is not in our budget, we explain that we have to make priorities about how we spend our money. If we buy that toy, then that would be one less pair of pants we could buy, and you need a certain amount pants for school. Recently, my daughter overheard the grocery store clerk tell my husband how much the groceries were. “One hundred and fifty-three dollars!?” She was shocked. He explained that yes, it was crazy expensive, we were lucky to be able to afford it, not everyone can, and that’s why it drives us nuts when she doesn’t eat the edges of her sandwich. It’s like leaving a dollar on your plate!

My daughter has asked us to pay her money for chores around the house. When it comes to allowance, each family must decide what works best for them. We have decided not to pay allowances or to pay for chores. I explain that it is her job to help out in the house. As a family, we all have a duty to make the household run better. She puts the dishes in the dishwasher every night because she is part of the family. I do, however, pay her to “babysit” my two year old sometimes when I have a household chore that I have to tend to, and I need someone to distract my toddler. I tell her that as the mom, it’s my job to watch the baby, but she can earn some money by helping me with my job. I distinguish between her household duty as a member of the family, and an extra job to help me out with my job. In doing this, I hope it helps her to grow up not feeling entitled, with a strong work ethic, and the knowledge that in life, you just have to work. That’s the deal.

We also try to scale down Christmas and birthdays. I believe that if I only ever gave the kids two gifts for Christmas they’d be just as excited as if I gave them ten. But once they expect ten, they are let down at two. I’ve tried very hard each year to keep it minimal. Unfortunately, that may be a battle I’m losing, because it becomes uncomfortable when grandparents lavish more gifts than Santa Claus. What’s a Santa Claus to do?

Parents, your time is limited and you are exhausted. But you don’t have to summon loads of energy to teach your kids about money, just show them with your everyday actions and conversations. As parents, we have to work hard, spend wisely and value what we have. We have to be vocal about it with our kids. Let’s hope they get the message, because I don’t have time for a bigger discussion on the matter – I have to leave right now to get to my six year-old’s soccer game.

Harli Palme, CFA, CFP®
Partner

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Living Healthier – Better for your Wallet, Not Just your Waistline.

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A couple of years ago I made a significant lifestyle change. After gaining post-college weight, I realized that the carefree metabolism of a 20-year old went out the window at 21. I made the decision to stop eating unhealthy food and develop a workout regimen that I could stick to. At first I worried that I couldn’t afford to live “healthy.” I believe that this is a normal and reasonable reaction. $120 for a gym membership? WHAT! $10 for organic breakfast? HUH? Thankfully, what I realized was that I was incorrect to think that “healthy lifestyles” and “expensive lifestyles” were synonymous. I actually saved money! Here are just a few ways that you can get healthy, save a dollar or two, slim down and be happier.

  1. Get rid of your expensive bad habits:
  • Do you pay $10 a day for a double pump, venti, skinny, salted caramel mocha frappuccino? Stop it! First, whoever told you that this was “skinny” was lying to you. Second, these things add up. What bad habits do you have? Is it the lunch time soda? The mid-afternoon candy bar from the vending machine? The two packs of cigarettes a day? Once you write down your vices, tabulate them to see how much those bad habits cost over a week, a month, a year, a lifetime.
  • Example: A pack of cigarettes in North Carolina costs $4.45. You could spend more than $49,662 on smoking a pack a day for 30 years. According to the American Cancer Society, each pack of cigarettes on average will cost you $35.00 in health care costs. That’s $383,250 in health care costs due to smoking for 30 years. Is it worth it?
Vice Per day Per 30 Years 30 Yr Health Cost Total 30 Yr Cost
Cigarettes $4.45 $49,662 $383,250 $432,912

 

  1. Reduce your medical bill:
  • It’s impossible to ignore the fact that eating healthy and exercising can reduce visits to the doctor. There are a plethora of studies out there that prove a healthier diet can reduce your risk of heart disease, lower your cholesterol, reduce stress on joints from excess weight, etc. To give you a personal example, I have always had trouble with stress management. I’m a worrier (#shegetsitfromhermama). Since I was a child I have racked up numerous medical bills related to anxiety, including medications, sleep studies and doctor visits. Had I known much earlier that by slapping on a pair of running shoes and going for a jog, I could eliminate a lot of my stress, I would have saved myself and my parents a lot of money. Running is a much more affordable way to blow off steam than medication. With my routine, I was able to ditch the expensive medications and doctors’ visits.
  1. Waste not:
  • I’m marrying a Dutchman soon… literally. One thing I learned from him and his Dutch family is to waste nothing and use everything. When I first started dating Chris I couldn’t understand how he would eat 2-3 times more food than I did and spend 2-3 times less money than I did. The answer simply was he didn’t waste anything. Now, this was a bit harder for me to do. Chris could sit down and eat hummus with a spoon, but if I didn’t have crackers to eat the hummus I’d let it sit there, go bad, and then I’d throw it out. So how did I fix this little problem and save hundreds of dollars doing it? Planning! How did I shed some pounds? Planning! Sit down at the beginning of the week and plan out all your meals. When you plan ahead of time you’re more likely to make healthier choices. You also are less likely to go out and eat when you have already planned, purchased and prepped your healthy food choices. Once you realize the savings potential you start using the “waste not” mentality in other facets of your life.
  • Tip: when planning your meals ahead of time, leave yourself a day to go out and splurge. Without the occasional “cheat” you may go crazy and give up.
  1. Cut on transportation cost:
  • Now this isn’t possible for everyone, but for a lot of people you can quickly save some money, cut cost and your waistline by switching up your transportation methods. Bike and walk to work. Is there a train nearby? Then walk to the train rather than driving to your office. If you are eating out for lunch, pick a restaurant that you don’t have to drive to. A lot of people say that the time spent walking is a great way to meditate, and reflect on their day. This can offer a peace of mind that can’t be achieved with the stresses of the road.
  1. Create healthy family outings:
  • Skip the $30 movie, popcorn, and 2 hours of inactivity and do something active with your family. Spend $15 on a soccer ball and go to the park on Sunday afternoon. Take the dog on a hike or a walk. This brings up another point… working out and being active is always more rewarding and sustainable when you have a support group or community of people that you workout with. If healthy outings cannot be accomplished with busy family members, then join a running club, a biking group or a community gym.

I could write an entire blog series on ways to be healthier and save money… but the key is to start small! Pick an area that needs improvement in your life and manage it. Use the momentum of a small change to snowball into an entire lifestyle change. Fatten up that wallet by trimming up the love handles!

Ashley Woodring, CFP®

Financial Advisor

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