This may hold your trip bills and year-end funds in verify. Your questions answered

During this unusual Christmas season, many consumers announced that they would be spending less than last year due to the Covid-19 crisis.

Not all plan to be frugal.

Here are answers to some financial questions I got from CNBC viewers about vacation budgeting and keeping your finances up for the new year.

How can I prevent too much being spent on vacation? With all the darkness and fall this year, I want to give everything!

Some people may think that shopping will lift their spirits, but over-spending can be a serious downer. Consider it:

Give your time and your talents. Volunteer to help out in a pantry, deliver groceries to neighbors in need, or make care packages for friends and family. You don’t necessarily have to buy a lot (or nothing) to make a great gift.

Make your wish list before you shop online. You want to avoid placing too much material in your shopping cart. Stick to your list and look for a discount coupon code that you can use at this retailer too.

Only spend what you can afford. In normal times, some financial advisors have suggested spending no more than 1% of your annual salary on vacation travel and gifts. However, these are not normal times. You might want to give it your all this year, but if it doesn’t fit your budget, don’t buy it!

I will be using my credit cards for all of my vacation purchases. What do you think of best practices?

Most people will use credit cards to pay for vacation purchases, but still want to get the biggest bang for their buck. A reward cashback card can be a great option by giving you 1% to 5% cashback on various purchases.

You can use this money to pay off your next credit card bill or pay for other gifts. There are many cashback cards on the market, but look for a card that doesn’t charge an annual fee. Some may offer an annual introductory percentage of 0% for 12 months or more, which means you won’t pay any interest for at least a year.

Remember, when you use your credit card, you are only spending what you can fully withdraw in the next billing cycle. The last thing you want to do is carry your vacation debt into spring.

How much should we save for the unknowns of the coming first quarter?

Review your financial goals for the new year and now start planning how much of your income you will likely need for expenses and savings. Try the “60% solution”. Do not allocate more than 60% of your gross income towards tied expenses (mortgage or rent, groceries, utilities, credit card and student loan debt, and all taxes).

Divide the rest of your income this way: 20% for long-term savings (including retirement savings) and 10% for short-term savings (this is your emergency fund). If you don’t have a lot of cash available, you can change these percentages.

The last 10% are your “fun money” for this splendor. After you’ve covered your expenses and topped up your savings, spend what is left (but no more than 10%) on whatever you want to keep your spirits up!

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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