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The Holiday Gift that Keeps on Giving

Ever notice your closets are packed full? Even if you move to a bigger house with more closet space, you’ll soon fill them up. The inverse is true with our checking accounts. We tend to spend what we have in our accounts even if we increase our income. We get more money and spend more of it without much consideration for how we are spending. There is satisfaction in being able to provide for ourselves and our families and it can feel good to purchase the things we want when we want them. Unfortunately there can be negative consequences if we aren’t thoughtful about our spending habits.

With the holidays approaching many of us are in the mood to give, whether through gifts, charity or our time. It is satisfying to have thoughtfully picked a gift, carefully wrapped it, and watch the recipient’s reaction when they open it! Most of us tend to be generous during this time of year and with good reason. Our loved ones are important to us and we want to share our love by spending time together and giving gifts. To continue doing this through our lifetime we must maintain good health and disciplined financial habits.

If you have a spend first, save second mentality you will have less left over to save after holiday shopping. To be able to afford giving generously when you stop working consider “buying” future gifts now by saving. The key is to put your money into savings and investments before you start spending on the holidays this year. By developing smart money habits today you will most certainly have more to give in the future. Fortunately there are several ways for you to save first, here are a few of our favorites.

1)  Automatically contribute to your retirement accounts each month. Do your best to save up to the maximum using individual retirement accounts (IRA, Roth IRA) and employer sponsored retirement plans (401k, 403b).

2)  Transfer money from your checking account to your savings account each month. Do not dip into the savings account and make it a goal to accumulate between three to six month’s worth of living expenses in that account.

3)  Treat savings like a bill. By making saving a mandatory action item each month over time it will become second nature. Whether you start by physically saving cash or change in a jar, open a small investment account or make automatic transfers from your bank. You wouldn’t dream of not paying your cell phone bill, so pay your savings bill, just do it!

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