Christmas, to me, has always lent an opportunity to be merry, spread joy and spend time with both family and friends that I do not see on a regular basis. For my wife and I, this year will be extra special as is it will be our first Christmas as parents. We have been blessed by our son who has just surpassed 11-months-old and who has become extremely mobile. His true and unadulterated fascination by everything is contagious. Watching life through his eyes has given me a reminder of appreciation for the little things in life.
With this Christmas holiday being our first as parents, it brings some added self-pressure to make sure that our son has an enjoyable first Christmas. As we prepare, we have used our budget to navigate this pressure and ensure we are still on course for reaching our financial goals. The Christmas holiday can pressure every budget. Falling off your budget in December (or any month for that matter) will lead to starting the next month behind. This can be even more important for December as the start of the year tends to have many required, annual payments due, such as property and income taxes.
Using credit cards may be enticing to help cover some of the budget deficits. I would strongly reconsider swiping your credit card. The typical credit card interest rate in America ranges between 15% to over 30%. Interest owed will be accrued monthly on any unpaid balance which will continue to exasperate the deficit issues.
As my wife and I have pushed to stay within our budget, it has given me additional opportunities to reflect on what values that I want to teach my son. For most children, it is hard not to relate how good of a Christmas you may have based on how many gifts you receive. I want to make sure to raise my son with the idea that Christmas is not about gifts but about being merry, how much joy you can spread and spending time with family and friends. Combine this philosophy with living the last year of seeing happiness through my son’s eyes and it has really shown me the importance of spreading joy by giving. This can be done not only by financial or material giving but by time volunteering with a local charity. To this reflection, we have increased our personal December charity budget amount.
Many local charities give directly back to the community that you live in. Find a charity that has a mission statement that resonates to you. Your generosity can give a local child or a family an opportunity to have a Christmas that they may not have otherwise. Keep receipts of these charitable donations in your current year tax folder. Contributions given to 501(c)(3) charitable organizations may receive a tax benefit if you plan to itemize deductions when filing your tax return. Unlike the 2020 and 2021 tax years, there are not any charitable deductions allowed on your 2022 tax return if you do not itemize.
If you have significant charitable contributions, be sure to coordinate with a Certified Public Accountant or CERTIFIED FINANCIAL PLANNER™ professional to make sure you are maximizing any potential tax benefits.
Merry Christmas and Happy Holidays!
Published in the Victoria Advocate
Christopher Laughhunn CPA/CFP® is the Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for KMH Wealth Management, LLC.