Avoid the Holiday Shopping Hangover
With the holidays comes the joy of gift-giving. Unfortunately, without proper planning, purchasing these gifts can cause undue emotional stress and financial burden. Here are some steps to help you take control this year and avoid regrets when your January credit card statement arrives in the mail.
Create a spending plan.
Make a written plan for holiday spending and gift giving – include who you will be buying for. Think about how much you can afford to spend on gifts, decorations, holiday meals, donations, postage, clothing and travel. Set spending limits for each person as well as the other items in your spending plan (such as décor, wrapping supplies, travel, holiday meals, etc).
Practice strategic shopping.
Have separate shopping and spending trips: make one trip to compare prices and create a plan, then return later to make the purchase. Do not shop during peak hours (i.e. payday), this will keep you from feeling rushed and making impulse purchases. Allow yourself plenty of time and try to shop early in the season. This will also save you money on last-minute shipping charges.
Use good money sense.
Paying with cash is best! This method allows you to keep track of your spending and not spend more than you have. Chances are if you have to leave and go get more cash from home, on the way you will realize you didn’t really need to purchase that gift after all. If you must use a credit card, use only one. It is much easier to track expenses on one card vice five or six. Use a card with a low, fixed interest rate. Make sure the resulting card payments fit into your regular monthly budget. Don’t try to keep up with the Jones’s or with family who may have more financial resources to give lavish gifts.
Separate your “big ticket” purchases.
Spending a large amount on one item (say, an HD television set for $1,000) causes other purchases to suddenly seem like a great deal by comparison (a Blu-Ray player for $100). To avoid falling into the trap of spending more than you planned due to “phantom” good deals, make sure you only buy that one “big ticket” item in the store. Go back another day for any other purchases – most likely you will realize that the $100 Blu-Ray player is more than you wanted to spend.
Open your mind to alternatives.
If you can’t settle on a gift for someone, give a gift card. This will allow you to stay within your budget. Check-out local thrift stores or online classifieds – many have brand new items for sale at greatly discounted prices. Also consider online shopping, this is a great way to find the best deals and coupon codes are often available through search engines. Or discuss with your family the possibility of setting a per-person dollar limit or have a “Secret Santa” family exchange, where each person draws one other person’s name, to cut down on the number of gifts everyone must purchase.
With proper planning, you can provide a memorable holiday for your family without taking a big bite out of your finances! Do you have any tips as well?