Tuesday, December 2, 2014

Holiday Gift Giving Tips from Lise Andreana

This week I had the opportunity to participate in a radio interview for Marketplace Weekend at the University of Arizona PBS station. This proved to be a very interesting opportunity, not only to see the inner bowels of a radio station, but to hear from listeners about their gifting concerns. This was insightful as many of their concerns may be shared by you. 

1.       Q. Do you have any tips on how to balance your finances during the holidays?  

A.      The most important thing to know about gifting is: can you afford to do it? If your answer is yes, how much of your annual budget should you allocate to gifting? Considering the average family spends 60%-70% of their after tax income on the necessities of life, that leaves 30%-40% to spend at your discretion. Discretionary items include personal care, clothing, entertainment, holiday travel, gifts and charity. A realistic budget for gifts is 1%-3% of your after tax income. A similar amount can be used for charitable causes. If you have a lot of debt, or are not saving at least 10% of your income each year, it’s best to stick to the lower range.  

The best way to plan for gifts is to set up a Gift Savings Account in advance. This is a special bank account to which you contribute a preset monthly percentage of your income. You contribute an amount you can afford and you wish to devote to gifts. This way when the holiday season rolls around you are ready.