By Loren Hsiao
Lunar New Year is one of the most important festivals for millions around the world, a time when people focus on celebrating with family, feasting and giving gifts. And, while there are differences across the many cultures that celebrate the holiday this time of year, there are also similarities, including bright red envelopes that typically include a financial gift.
Wondering how to make the most of your good fortune? Start the Year of the Dog off right with these tips for keeping your budget on track while gifting, as well as how to use your financial gifts.
Gift-giving traditions
Whether your envelopes are red or white, financial gifts are very popular among many Asian cultures. These gift-giving traditions symbolize good wishes for the New Year, and are usually honed by observing what our elders have done in the past.
How much is enough? While there are no rules for how much you should give, before you begin slipping bills into envelopes, sit down and review how much flexibility you have in your budget to ensure you’re staying within your means.
Virtual gift giving is also becoming increasingly popular. While paper envelopes are traditional, consider mobile apps that allow for virtual gifting as a convenient way to transfer funds directly to family and friends.
Get your financial house in order for the New Year
Lunar New Year celebrations require plenty of preparation – in some cultures, even cleaning to clear your house of any bad luck. While getting your house in order, take the time to do the same with your finances.
If you don’t already have a budget, create one by evaluating monthly expenses like rent, utilities, credit card bills and any other fixed payments. The 20/60/20 breakdown is a good place to start for budgeting: 20 percent of your monthly income for saving or investing, 60 percent for fixed expenses and 20 percent for discretionary spending.
As this time of year can also be a season of spending, don’t forget to include these expenses. Set a post-New Year budget plan that aligns with your long-term financial goals to get back on track.
Welcome prosperity with your financial gifts
When looking back on your financial habits the previous year, ask yourself: Did I reach my goals? Perhaps you wish you’d set aside more money toward your savings, or maybe you spent more than you’d anticipated. Whatever you find, take this opportunity to reset for the year ahead.
Address the tough questions: how much credit card debt do I have? Am I contributing to a retirement fund? Do I have enough money set aside in case of unexpected expenses? Answering these questions will help you better identify how you can prioritize to make the most of your financial gifts.
By using the New Year as a time to refocus on your finances, you can confidently prepare for the year ahead.
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