If you’re like many people, you may not want to think about the cold months ahead. However, winter is just around the corner, and now is a good time to start preparing financially for it.
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Snow and frigid temperatures – in some parts of the country – coupled with often expensive holiday seasons can make for an expensive winter. Whether you stay and brave the cold or head out of town for the season, the costs can add up quickly.
Putting some money aside now can help you avoid being short of cash this winter when you’re faced with higher-than-expected expenses. It can help avoid additional financial stress and ensure you don’t find yourself scrambling to pay unexpected bills.
The sooner you start preparing financially for winter, the easier it will be to build a healthy cash reserve. Here are four expenses to consider in your winter budget this year.
Holiday costs
“So many people underestimate the additional expenses that come their way around the holidays, when their spending skyrockets on gifts, travel and entertaining family and friends,” says David Flores Wilson, financial expert and managing partner of Sincerus Advisory.
“We’re also finding that the overall stress of the holiday season means other stress-reducing and time-saving expenses are likely to increase, whether it’s taking an Uber instead of walking or ordering from Grubhub instead of cooking at home.”
This often leads to a significant increase in expenditure.
“We often find that people spend 20 to 30 percent more in November and December than the annual average,” he added.
According to the National Retail Federation, people who celebrated the winter holidays are expected to spend an average of $875 on gifts, decorations, food and other essential seasonal items in 2023. Keep this in mind when setting your budget for the holiday season.
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Weather-related expenses
Winter not only brings biting cold, but also weather-related costs.
According to Wilson, “a major snowstorm and unusually cold temperatures could mean having to pay someone to shovel your driveway or deal with frozen pipes.”
According to Angi, the average cost to clear snow from a driveway large enough for two cars parked side by side is about $30 to $50 per session. That price can be closer to $200 if you opt to spread salt or sand.
For this reason, Wilson advises preparing for the unexpected this winter.
“An emergency fund for the winter would make sense,” he added.
This can help you reduce your winter expenses, such as higher heating bills. For example, according to This Old House, the average household that heats with natural gas spent $855 on heating bills last winter.
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Tax expense
It is also important for retirees to speak to their accountant or financial planner at this time of year to get an estimate of their April tax liability.
“If it’s a lot more than expected, knowing it in the winter will help you estimate how much you’re going to spend and avoid running out of money to pay unexpectedly high tax bills,” Wilson said.
“Many people have benefited from a high interest rate on their cash in 2024, but because there is no withholding tax on the interest, people could face a higher tax bill than expected.”
In addition to your tax bill, you must also consider the cost of a tax preparer to prepare your tax return (unless you do this task yourself).
The average cost of a tax preparer for a detailed Form 1040 with Schedule A and state tax return varies by region. For example, according to the National Society of Accountants, the average cost is $285 in New England, $432 in the Pacific region, and $217 in the southeast central states.
Travel
If you live in a cold-climate state, you may be planning on getting out of town during the winter months. Now that you’re retired, you have the freedom to become a “snowbird” and escape to a warmer location to escape the snow and frigid temperatures.
However, traveling for several months isn’t cheap. In addition to the cost of your full-time home, you’ll likely also need to rent accommodation in a warmer climate and pay for round-trip travel—among other expenses.
For example, according to Snowbird Haven, renting a home in Florida during the winter can cost around $4,000 per month, or $12,000 for three months. That may sound like a lot, but it’s actually more for cheaper homes.
Being a snowbird is a luxury, but you’ve worked hard for your retirement, and if that’s what you want, now is the time to start preparing financially for an extended period of time away from the cold weather.
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This article originally appeared on GOBankingRates.com: I’m a Retirement Planner – Here are 4 Things Retirees Need to Consider in Their Budget This Winter
