Beyond the Budget

The holiday season is just around the corner and for many Americans, shopping for Christmas will be chipping away at their bank accounts.

While the joy of gift giving can be a wonderful experience, the financial stress caused by holiday traditions can strain the pocketbook and add stress long after the holiday season is over when the credit card bills come due.

The average American spends about $1,000 on gifts and other holiday expenses each year. On top of that, they also spend about $1,500 on holiday travel. Many put those expenses on credit cards, which have an average interest rate of 16%! So, once the presents are unwrapped, the leftovers are in the fridge and everyone goes home, the money continues pouring out of bank accounts and into the coffers of the credit card companies until the next holiday when the cycle starts again.

Shop, pay, and repeat.

How do we put a stop to this seemingly endless cycle of spending? The best way is to budget holiday expenses into your monthly budget well in advance, so that when the holiday arrives, you don’t have to rely on credit cards to foot the bill. This can save a consumer hundreds – possibly thousands – of dollars over their lifetime, but it can be tricky to work those expenses into a budget without some assistance.

Christmas spending may be at the top of a consumer’s mind at this time of year, but there are plenty of great budgeting apps available to consumers and many do have ways to plan for big purchases throughout the year. These apps, however, make consumers do the hard work of setting up the savings accounts, manually transferring funds to said accounts, and using discipline to not dip into those funds for emergencies or other expenses.

“A system utilizing BOND.AI’s AI can automatically connect all the dots of your finances to set aside the payment each month, keep the consumer updated about the insurance budget and make related adjustments as needed.”

Artificial Intelligence is a great solution to aid when planning your holiday budget. Instead of manually performing all these financial tasks, an AI-based budget tracks a consumer's historical spending, plans accordingly and sets funds aside automatically each month without being told to.

For example, the average consumer spends about $1,674 per year on car insurance. While most insurance companies do offer monthly payments, there are some that offer discounts to those who pay annually. That’s a lot of money to come up with in one payment, but a system utilizing BOND’s AI can automatically set aside the payment each month, keep the consumer updated about the insurance budget and make related adjustments as needed.

Bond’s AI keeps track of any type of expenses and removes the burden from the consumer having to remember to include these items on their own. What about irregular monthly expenses like utility bills, which can fluctuate wildly as seasons change? Our AI technology can predict those fluctuations to save money when bills are lower to pay for the bills that are higher.

Homeowners can further benefit from the AI’s budgeting smarts. Sure, it will automatically build mortgage payments into your budget, but it goes one step further to help save money. This technology can keep track of home values and interest rates to find the best time to refinance your home. It also removes the complicated process that can come with the refinance process. On a $320,000 mortgage loan, just a 0.5% reduction in the interest rate can save a homeowner $500 a year! Wouldn’t that be a nice amount to add to your Christmas budget?

Avoid the credit trap

Having an AI help with holiday budgeting will also help pay for gifts and travel without putting purchases onto credit cards. Credit cards are a useful product if a consumer can pay them off easily, but those only making minimum payments can create a cycle where they are still paying for last year’s gifts for months. Buy Now, Pay Later (BNPL) has also become a popular payment method, but BNPL has its own set of financial pitfalls. A budget built using an AI expense prediction can give consumers the confidence to pay directly from their available cash instead of racking up debt or extra monthly payments.

Christmas may be the biggest spending event of the year, but other holidays and annual celebrations like birthdays, anniversaries and Mother’s Day can be added into an annual budget with monthly withdrawals. This gives months a more even feel instead of the ebbs and flows that are accompanied by anxiety and uncertainty caused by going overbudget.

As the holidays arrive this year, take a moment to evaluate your budget and plan ahead so that the next 12 months are full of the happiness and joy the season brings instead of worrying about how far into next year you will still be paying for the past

Click here to learn more about BOND.AI.

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