With the holidays quickly approaching, I think it’s time we discuss proper spending and saving for this time of year.

The holiday season is a special time of year that brings together family and friends to share a special day with one another.

That said, it also brings along expenses. Buying gifts, food, and for some, plane tickets. What can you do to help save money during this time of year? Let’s find out.

Save!

Your holiday spending plan should start on January 1st. Set up a recurring transfer from your checking to your savings account.

Start with an amount that’s realistic. Personally, I do a weekly transfer. $10 per week. Multiply by 52 and we get $510 (technically) for holiday spending.

Another way to boost your savings is to start with one dollar amount, say $5, and increase it incrementally throughout the year.

There are a ton of savings challenges out there. Check this one out!

Start early

When buying gifts, a lot of people wait to buy big items on Black Friday or Cyber Monday. Regularly marked down items are priced relatively similar to those items that go on sale after Thanksgiving.

Save yourself the hassle and stress, and buy items throughout the year.

Make a list

Create a list of the people you want to buy gifts for. After that, assign a dollar amount to that person. This is how much you will spend on each person.

Here’s an idea for next year. Make that list right away and add it up. Whatever the total is, that’s how much you need to save for your holiday budget.

Another point I’d like to make. If your list is long and the total $ spent is high, you might want to consider removing some people from your list.

I know this might sound harsh, but you don’t have to buy them something. Maybe bake some cookies for those you won’t buy gifts for.

Use tech to your advantage

There are so many apps and programs out there that can help you save money. A few of my favorites are Coupons.com and Gas Buddy.

For online shopping, there are browser extensions and apps like RetailmeNot and Honey that find coupon codes for you.

The link below is an article about 7 different apps that can help save you money during the holidays.

7 Best Apps for Holiday Shopping

Track your spending

There’s no better way to gauge outgoing cash flow than tracking your spending. When you track your spending, you not only figure out how much your spending, but on what.

Better yet, use that list you created earlier and record what you spent on them. It keeps you honest and gives you a “checklist” so you don’t buy for someone more than once.

Make gifts

Handmade gifts are so much less expensive than store-bought gifts (most of the time). Also, in my experience, they are more appreciated than purchased ones.

Take a skill or craft you enjoy and make something special for someone.

Holiday party alternatives

There’s a large number of things you can do instead of your normal holiday party. For one thing, if you do have a party, make it a potluck! Everyone brings a dish so the financial burden of preparation doesn’t fall on one person.

Take the family sledding. Start a Secret Santa. Go for a walk/drive through a neighborhood and admire all of the Christmas lights.

One thing I found when researching for this article that moved me was volunteering at your local food pantry. Serve and set up a meal for those in need.

Treat yourself

There’s one other person I want you to put on that list. Yourself. We bust our backs trying to make a living, and often, we think about treating everyone else, but not ourselves.

This year, do something for yourself. Buy that thing you’ve wanted or take yourself to dinner. Whatever #treatyourself looks like, do it. You deserve it.

Related reading:

Does Money Reduce Your Holiday Cheer?

How To Cut Your Spending

Read More:

What Is The 2023 Walmart Holiday Schedule?

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

 

www.crgfinancialservices.com/

One of the most popular investment vehicles in use today is the index fund. Recently, the assets under management in the index fund category surpassed that of which is managed in active mutual funds.

That said, what is an index fund? How did it come about? What are the characteristics of an index fund?

What is an index fund?

In its simplest form, an index fund is a passively managed mutual fund that tracks an index. It started out by tracking the S&P 500 and for a long time, that’s all these funds tracked.

Now, there are index funds for anything. The DJIA, biotech sector, micro-cap stocks, the list goes on and on.

In terms of stock market history, index funds aren’t old. The first index fund was created by Vanguard in 1975.

Through the late seventies and into the eighties, the index fund failed to catch on. It seems that only in the last decade or two, index funds were recognized as compounding machines and grew in popularity.

So what’s the big deal? Why are these investments so popular? What are the advantages and disadvantages?

Pros

• Low maintenance – Similar to a target-date fund, in the sense that you can invest a percentage of your portfolio in a single index, and leave it for an extended period of time. However, these funds won’t reallocate and shift from stocks to bonds, that’s on you.
• Low cost – Most index funds are low cost. I’m talking about the general funds that track large indexes. It also makes a big difference if the fund is with a big fund family or not. The big fund companies have more capital and more products, so they can offer for less. Also, as a general rule, the more specific an index gets, the higher the expense ratio.
• Participation in the broad market – you have the chance to grow your principal (original investment) by participating in the potential growth of the stock market

Cons

• Concentrated index – most index funds are market cap-weighted, which means the larger companies make up a greater portion of the index. That provides you less exposure to smaller companies AND can leave you concentrated in one industry. Four of the top five companies by market cap are tech companies.
• You ride the index up, and down. When the stock market tanks, there’s no protection if you invest in an index. For example, during the Great Financial Crisis, the S&P 500 lost 55%. The Vanguard S&P 500 index (VFINX) lost 55% from peak to trough.

Commonalities with active funds

Active mutual funds and passive index funds do have similar characteristics.

• Potential growth – Each of these has the chance to grow and compound over time. History shows that passive has a leg up in this category, but a portfolio manager of an active fund could outperform the index
• Target date funds – I briefly mentioned these before, but you pick a date in which you plan to retire. For example, 2040. You would then pick a 2040 target-date fund. At this point in time, the fund would probably be allocated 80/20, stocks/bonds. As we get closer to 2040, the fund will progressively shift its allocation more towards bonds.

What I think about index funds

I’m a big fan of index funds, especially for the general public. Fees, over the long-term, are really good at eating into your returns. Selecting low-cost index funds reduces your fee exposure.

That said, I’m also a believer in active management. When the economy is booming like it has the last 10 years, index funds will win almost every time. However, when the market finally turns over, that’s where an active manager can set themselves apart.

Related reading:

The Pros and Cons of Index Investing

The Different Between Mutual Funds and ETFs

Fees and Why They Matter

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

 

www.crgfinancialservices.com/

Levels of anxiety and depression seemingly climb every day. This week, we are covering a different subject. It’s incredibly important, personal, and relevant.

I want to go over my personal struggle with mental illness, the things that I use/do to help, and how I figure out when I need help. Towards the end, I’ll tie in some instances of how your finances can impact your mental health.

My diagnosis

I have anxiety and depression. I was diagnosed earlier this year. Once you can put a name to how you’re feeling, your eyes open.

When I was diagnosed, it forced me to look back on my life and I realized that I’ve had this for a long time. Mannerisms, behaviors, etc. all made sense.

With the diagnosis, however, came a new challenge. How do I treat this? How do I cope?

How I feel

At the time of writing, not great. I call these, funks. A funk means I’m depressed. Reluctant to hang out with friends and family. Reluctant to talk to anyone. I just want to be alone.

That said, the funks don’t usually last long. My current one is going on for four days.

The question I often ask myself when I’m in these funks is, is this the depression or my current situation that’s causing this? The answer is both, but is one playing a bigger role than the other? That question will never have an answer because there is no way of knowing.

What I do

There are a few things that I’ve started to help cope with anxiety and depression.

• Exercise – You have to. In my opinion, this is the most important thing you can do for your mental health.
• Talk to someone – I go to therapy every three weeks. When I started, I was going every other week, but I got to the point where I felt good enough to wait one more week. It’s also a good idea to have a “person” you can go and vent to. Get it off of your chest.
• Journal – Before I go to sleep, I review the day to see how I felt throughout and try to figure out why I was feeling a certain way. I also list a few specific things I was grateful for.
• Medication – I’m on an anti-depressant, which has helped, but I also think I need to change this up. Talk to your therapist and/or psychiatrist to get this figured out.
• Meditation – I don’t have a formal mindfulness practice. Mine is centered around movement and breathing. Specifically, I do Tai-Chi every morning. It has helped tremendously.

When to get help

I have a very obvious line in the sand for when I need to get more help.

When I’m depressed and in a funk, I know it’s only temporary and will get better, but if I ever think that it won’t get better, that’s the sign.

That’s when the thought of suicide can become more prevalent.

Finances

There are a few examples when your finances can hurt your mental state.

• Too much debt – If you are in a hole and can’t see a light at the end of the tunnel.
• Feeling like you aren’t where you thought you’d be.
• Making just enough to pay your bills, with very little, if any, leftover.
• Investments – having an emotional attachment to your portfolio is never good. In this case, I usually recommend people ask themselves two questions.
  • What type of portfolio allocation will help me meet my goals?
  • What type of portfolio allocation will help me sleep at night?
  • The right allocation is usually somewhere in the middle, but it’s a good idea to backtest the allocation to see what you are really comfortable with.

Related reading: The Psychology Of Money, The Questions You Need To Ask Yourself

My pledge to you

Whether it’s finance-related or not, I’m here if any of you need to talk. Below you’ll find my email.

Email

Mental illness is a big problem in this country and around the world. If you or anyone you know is struggling, utilize the resources below!

Suicide Prevention Resources

Finding Help

Remember, you are never alone. There is always, ALWAYS, someone that wants to help.

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

 

www.crgfinancialservices.com/