As the holidays approach, this is a smart time to reconsider and reset habits for handling finances, but it takes planning, discipline, and the power of saying “no.” 

“Get your finances in order before the holidays,” USAA advice director Josh Andrews said during an Oct. 29 presentation at TotalForce+, MOAA’s inaugural people-focused conference held at National Harbor, Md. “Reset and refocus” to reduce stress as you finish out the year and look toward financial freedom.

He advises these four steps to strategize your spending: Know where your money goes, know where it should go in terms of your goals, build a spending plan, and stay on track with it. To help visualize what that should look like, figure on 50% of income for needs, 30% for wants, and 20% for savings and debt payment.

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In simple terms, spending less than you earn means saying “no” to some impulses.

“That takes discipline,” Andrews said.

He applies that directly to holiday gift giving. Andrews suggests listing the people you will buy for and setting a dollar limit for each person or category of people (more for your grandkids and less for not-favorite siblings, for example). Add up the gift total, plus an estimate for fun holiday activities, and arrive at a grand total to set as your limit. Depending on your situation, it may work best to plan well ahead of the holidays and set aside a portion of the total regularly so you go into the holiday season on track to avoid debt.

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More strategies for financial readiness and peace of mind include:

• Make sure you have emergency resources for three to six months. An estimated 70% of people in Gen Z don’t have enough money stashed to get them through three months, Andrews said. If you use reserves for an emergency, move your crisis fund to the top of your priority list for saving, he said.
  
  
• Get a handle on any debt. Sum up all types of debt you carry and estimate the total. Prioritize paying off the highest interest-rate debt first. Consider whether you would benefit from a debt consolidation loan, Andrews said.
  
  
• The end of the year is a good time to look at investments and consider the impact of inflation over time. In setting aside a portion of earnings to reach your retirement goal, “pursue consistency over perfection,” Andrews said.
  
  
• Assess whether you have enough life insurance. Andrews said USAA advisors are available to help.