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Created: December 4, 2023
Modified: December 1, 2023

Financial Planning & Holiday Traditions

The holiday season is here. It’s a time for family and traditions, but it’s also a time where you can take some opportunity to talk or think about some of the important financial components that can go into being financially successful.

Importance of Budgeting

Discussing budgeting may not be the most enjoyable topic, but it’s worth acknowledging.

Many of us or people we know have experienced moments of spending too much money during the holiday season, and then the next five months of the year are spent paying for all the things that you bought for the holidays. So, one of the perfect examples of good budgeting is to not do that, right? Make sure that when you’re doing gifts, you are staying within your means. I know it’s hard, especially if you have grandkids.

What you want to do is be honest about financial mistakes with family members. This might mean mistakes that you’ve seen friends go through, or it may be mistakes that you’ve gone through yourself. Either way, it’s important that we’re open about budgeting and the importance of it.

For next year, do you have some kind of a budget? I don’t like the word “budget.” I don’t like anybody telling me what I can and can’t spend. So, I like the idea better of knowing what you can spend every month and setting aside money off the top to make sure you save, if not borrowing money for those monthly expenses. It can be that simple. Budgeting can be that simple, or it can be every single line like some of you like to do.

All of us have saved money for something at some time in our lives. Some of you might be saving for retirement, some of you might have saved so you don’t have to borrow money to buy a car or buy a household appliance or something like that. Think about the benefits of saving, and then think about the opportunities next year for where you can save.

Talk Finances with Family

A lot of people feel a little stressed about money around the holidays. Use it to take action in ways that are positive to you, and again, express those holiday traditions, not just in having a good time with family, but also maybe talking to your family about some of these things.

What are your values when it comes to money? What kind of values do you have? Is that an area of opportunity for you to discuss those things as you get together with family? And again, you know how I feel about grandparents sharing with grandkids. Those grandkids will listen to you a lot more than they will listen to their parents.

So, is there an opportunity there to share your values, whether it’s values of giving, investing, charitable work, things like that? As far as investing goes, maybe you want to be vulnerable and share with your family about investing mistakes that you’ve made and investing successes that you’ve made. You know, it’s easy to talk about the successes we’ve had in investing with friends and family. That’s something we hear about a lot. But what if you shared some of the mistakes that you’ve made?

Share Mistakes, Not Only Successes

Many times, people learn a lot more from pain than they do pleasure or reward. And it’s those painful mistakes that many of us have made where we must sacrifice to get out of a hole, where we have to clean things up, or maybe we’ve made mistakes that we’ll never recover financially from. So, from an investing standpoint, when you’re sharing investment advice or listening to investment advice, think about the consequences of making mistakes as well as the successes.

Charitable Giving & Gifting

My wife, Wendy, and I support a number of different organizations from a wide variety of different causes. For you, this may include being part of a church, or a synagogue, or an organization that you care very, very deeply about. And that’s really important to us, so we talk about that with our kids.

Now, our kids don’t participate too much in that discussion at this point, but hopefully we’re planting the seeds so that at some point later in their lives, maybe they’ll ask questions about it, or it’ll just be embedded in their values system.

Let’s Talk Taxes

We know we get a tax deduction on our federal return, maybe even your state return, for giving money to charity. But we should touch base on some tax opportunities because, of course, the holiday season comes at the end of a year.

Do you have required minimum distributions, money that’s going to get forced out of your retirement plans when you are a certain age, or maybe it’s getting forced out right now? What are some charitable opportunities you can take with that? You can actually take money that’s required to be taken out and give it directly to a charity, and that’s a really nice opportunity to save a lot of money in taxes. Do you have the opportunity to gift money, maybe you have to pay taxes on it today to take it out of a retirement account, but if you think you’re never going to need that money, can you gift that to other siblings, or children, or grandchildren?

Consider a Roth IRA Conversion

Also, any time that we have retirement accounts, and we think it’s going to be a while before we use those retirement accounts, we should consider something called a Roth IRA conversion. A Roth IRA is tax-free to us, and it’s tax-free when we pass that money on. So, if you have a traditional retirement account, when you take money out of that, you get taxed. If your kids or grandkids inherit that money and they take it out, it gets taxed. And many times, if your kids are inheriting it, they’re inheriting it in their peak earning years before they’ve retired yet.

If you can do a Roth conversion and pay some taxes today, all the growth on that money will be tax free. And if somebody inherits that money, it will be tax free. So again, during this holiday time, we have all these different opportunities to take advantage of the fact that we’re at the end of the year. There might be planning opportunities to set ourselves up for next year and opportunities to support our family.

Setting Goals for Next Year

Are there lessons you’ve learned this year that you can go into next year with and do a better job? Maybe it was a mistake, or maybe there’s been a tremendous reward for doing the right thing and you want to do more of that for next year.

During this holiday time, whether you’re sharing these concepts with family or not, what are the opportunities to go into next year with a fresh start? I go to a gym, and I know the most crowded time in that parking lot is in January. A friend of mine and I just laugh because we know that by the third week of January, it’s going to start falling off. By the end of March, that parking lot is going to be easy to get a parking spot in. Don’t be that person.

Don’t come up with goals for next year and only let them stick for the month of January. Figure out goals that you can obtain, you can be rewarded for, and that can benefit you through next year.

Holiday Traditions

Let’s recap some of these holiday traditions. When we’re with family and friends, have we shared those values? Have we talked about savings? Have we talked about investing and budgeting with family members? Do you even want to do that or is it just something you want to reflect on for yourselves? Have you thought about charitable gifting? Is that a value to you? If it’s not a value of yours, then that’s fine. But if it is, is that an opportunity for you to talk with family while you’re around family? And then of course, finally, setting yourself for success up next year.

Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.

Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.

Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.

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