Financial Focus: Don’t break the bank on Valentine’s Day

In the 1989 film, “When Harry Met Sally,” Billy Crystal and Meg Ryan discuss their love lives over sandwiches at Katz’s Delicatessen in New York City. At that time, Harry’s pastrami sandwich and Sally’s turkey sandwich each cost about $12. Today, if Harry and Sally met again at Katz’s to talk about their grandchildren, each of their sandwiches would be close to $30. Times change, prices rise, but love will always be with us, so on this Valentine’s Day, enjoy the time you share with your beloved — but be careful about how much you spend.

For starters, a Valentine’s Day celebration can be costly. On average, individual Americans will spend $180 on their valentines this year, according to Drive Research — and, as a result, about a third took on new credit card debt.

Of course, $180, by itself, won’t put you in a debt crisis (though you may spend much more than that). And if you pay your card off each month, you won’t incur interest — plus, depending on your card, you may earn points and cash back. Unfortunately, though, many of us don’t pay our cards in full each month and end up paying interest, sometimes at a high rate. To avoid this situation, consider these steps:

Establish a budget — for all celebrations

Valentine’s Day isn’t the only celebration or holiday for which you’ll spend money on gifts. You’ve also got birthdays, Mother’s Day, Father’s Day and other special days. Together, these events can add up to a lot of money, which is why you should set a budget for each celebration — and stick to it.

Create a celebration fund

If you haven’t set aside any money for a celebration, you may well end up putting it all on your credit card. So, why not set up a celebration fund? Each month, move some money from your checking or savings account into a fund that you don’t use for everyday expenses. You don’t have to move a lot of money because over time you should be able to accumulate enough to pay for those special days. And when you get a windfall, such as a tax refund or a year-end bonus, you might also put some of that money into your celebration fund.

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Consider your priorities when making gifts

Whether it’s a dinner out, or a dozen roses, or any other present you give for Valentine’s Day — or other celebrations — you’ll want your gift to be meaningful. At the same time, you should always think of other priorities. For example, if you and your partner or spouse are saving for something like a down payment on a home or a long vacation, your contributions to these goals will have a big impact on your future happiness. This isn’t to say you should forego gifts for Valentine’s Day or other occasions — but you should realize that if you spend lavishly on these celebrations, there’s a trade-off involved — i.e., less money for your longer-term goals.

Ultimately, there’s no price tag on love — however you spend your time with loved ones on Valentine’s Day or other special occasions will be appreciated, no matter how much, or how little, money is involved. But by placing these celebrations within the context of your overall financial plans, you may be able to enjoy them even more.

This column was written for use by Edward Jones financial advisers. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Bret Hooper, Kevin Brubeck, Charlie Wick, Jeremy Lepore, Jessie Steinmetz, Ben Dodd and Mark Eaton are financial advisers with Edward Jones Investments and can be reached in Edwards at  970-446-0992, in Eagle at 970-328-0361, 970-328-0639 or 970-328-4959, and in Avon at 970-688-5420.