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Holidays need not break the bank

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The holidays are right around the corner. Most of us will soon enter into one of the busiest periods of the year for personal spending.

As we're spending, we also need to be thinking about budgeting, planning and protecting our finances to ensure that we not only make the most of our funds but that we also avoid overspending and falling prey to fraud and other dangers especially prevalent during the holidays.

Here are a few of my tips as a banker to help you make the most of your holiday spending and also to emerge from the season protected, safe and secure financially.

Set a budget. This is perhaps a banker's favorite suggestion, but we repeat it for good reason: It works. Your holiday spending will be more effective if you enter the season with a plan — and a limit — for how much you will spend. Before you head into the stores or start shopping online, sit down and rough out a plan for what you are prepared to spend for gifts, meals, decorations and other holiday activities.

One of the benefits of a budget is you always can adjust as you go. But having a general sense from the start of what you are able and willing to spend can help you avoid the biggest regret from the holidays: overspending that causes you to start the New Year in trouble with your savings or credit card accounts.

Use credit cards wisely. Speaking of credit card debt, if needed, limited use of credit cards during the holidays is best. Remember that charging your credit cards to the limit could have a negative effect on your credit score. Credit cards can be fine for purchases that you can pay off rather quickly in order to avoid hefty finance charges.

But for much of our holiday spending, we can save ourselves headaches and hassles by paying with cash, checks or debit cards. Buying this way requires that we apply some form of budgeting by using available cash or cash-related purchasing tools. This also prevents us from paying high credit-card interest rates on extremely small purchases such as decorations for the tree or stocking stuffers. Think about how cash, your debit card and your checks can help you buy smarter.

Be on the lookout for fraud. Sadly, the holidays are a time when fraud artists and other criminals are out in force trying to separate us from our money. You can avoid the trauma of falling victim to holiday fraud with a few simple steps.

First, be extra careful with your cash, wallet or purse, credit cards and checkbook as you're shopping. We're more distracted during the holidays as we hustle from store to store working on our shopping lists. Pickpockets as well as those who might be tempted by crimes of opportunity, such as a purse or wallet left unattended in a shopping cart or a credit card left in a chip reader, can't prey on us if we don't let them. Do your best to be extra careful with your items, including your newly purchased gifts.

Second, use one credit or debit card for online purchases to minimize the danger to your overall finances if that card is somehow compromised. Also, be sure to check your card statements more regularly online at this time to ensure that no strange purchases are appearing.

Third, be wary about attempts to steal your credit card, bank account or other financial information via online solicitations, including those masquerading as holiday charitable offers and email messages claiming to be from banks or credit card companies. Ask extra questions of anyone to whom you are giving important financial information, and know that reputable banks never ask for your secure information this way.

The holidays are a special time for reflection and relaxation with family and friends as we contemplate what truly is meaningful in life. By taking a few basic steps with our finances, we can avoid problems and enjoy this time as we should.

Steven Raj

Steven Raj is vice president of lending at Park State Bank in Duluth. You can reach him at stevenr@parkstatebank.com or (218) 727-8001.

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