SAN FRANCISCO (12/17/13)--The kickoff to the holiday shopping season that most retailers count on to boost their year-end earnings has come up short so far this year.
Despite retailers opening earlier and besieging shoppers with deals, spending over Thanksgiving weekend dropped for the first time in seven years, according to the National Retail Federation (Wall Street Journal Dec. 1).
The retail group attributes that drop partially to wary consumers looking for the lowest prices and to the deep discounts retailers must deploy to attract them. The good news for shoppers who manage to spend less this holiday season--even a few hundred dollars can improve your life.
Come Dec. 26, if you find yourself with a little extra money, here are some ways you can make it count (Time Dec. 3).
Start an emergency fund. Ideally you want six months of living expenses stashed away to cover unforeseen expenses, but even $500 is a good start. And once you have a good start, it can spur you to keep contributing.
Take advantage of compound growth. Before spending that money, consider putting it into your IRA (individual retirement account). Not only will compounding potentially double or triple it over time, but increasing your pre-tax contributions before 2014 can cut your 2013 tax bill.
Shore up your investments. The average stock price in 2013 has risen considerably. Now is a good time to take a look at your mix of investments. Talk with your financial adviser about reallocating accounts and where to reinvest your holiday savings.
Save for a bigger--ticket expense. Whether it's for a major house renovation or a dream vacation, put the leftover holiday money in a credit union savings account; whenever you have a little extra money over the coming year, set it aside also. You could end up with a gift the whole family will cherish for years to come.
Donate to charity. If retailers are having a hard time, it's a good bet charities are, too. If you itemize your tax return, consider helping an organization whose works you admire. Not only can you deduct the gift, but it might ultimately mean more to you than another present under the tree.
For related information, listen to "Shop and Save in Every Season" in the Home & Family Finance Resource Center.