7 Tips to Avoid Holiday Overspending
For many Americans, overspending during the holidays is as traditional as hanging a wreath on the front door. Temptation for shopping is high as consumers are enticed to buy the “perfect” gifts for family and friends. Getting caught up in the excitement is easy, and turning away from deeply discounted items can be hard. If you have a tendency for going on a spending spree in November and December, here are some tips you can use to help keep your holiday spirits high, while keeping spending under control.
- Create a holiday budget – Planning a holiday budget might not be fun but it is certainly one of the most basic strategies for maintaining control of your finances. Set a limit for what you want to spend and stick to it. Be realistic and consider all your expenses including gifts, holiday tips, and entertaining.
- Cash is king – Paying by credit card or debit card is convenient, but it is much too easy to go over your holiday budget. Carry cash and limit yourself to only spending what you have on hand. If you decide to take a trip to the bank or ATM to get more cash, you’ll have additional time to reconsider your purchase. Debit and credit cards simplify impulse buying and all those small purchases can really add up.
- If you must pay by credit card, be smart – For travel expenses and big ticket items, sometimes paying with a credit card makes sense – but be smart. Only charge a purchase if you know you will be able to pay off the entire balance when you get your bill. If you can’t pay off the balance, you will have to pay interest, ultimately spending more for an item which could negate any great sales.
Another tip: Do not sign up for any new store credit cards! The “special” deal or discount they offer you now is not worth the high interest rates the cards typically have. Plus, filling out credit card applications can negatively affect your credit score.
- Do your research – Retailers are persuasive and know how to induce impulse purchases. Be a savvy shopper by planning ahead. Research your choices and decide exactly what item you want to buy. When you walk into the store, head directly to that department and purchase just that item. Or even better– buy it online (as long as it includes free shipping of course).
- Avoid buying things you already have – Do you really need more holiday decorations or a brand new outfit for a party? Don’t spend money on unnecessary items; allocate your funds to pay for this year’s essential purchases. Be creative—arrange the decorations you have in a different way from last year, or update an outfit by complementing it with some accessories you haven’t worn in a while. If you must add to your holiday décor collection, shop after the holidays and take advantage of the deep discounts.
- Don’t fall for traps – From strategically placed accessories by the cash register to jumbo-sized shopping totes, retailers make it as easy as possible for you to buy more than you had planned. Stick to getting just what you need and avoid the rest of the temptations.
- Think long term – What are your goals for the coming year? Do you want to travel? Take care of some household or car repairs? Boost your emergency fund? When shopping for the holidays, keeping sight of your long-term goals can help you avoid overspending now.
The holidays can seem more like the season of buying than the season of giving. Take time to refocus your priorities on what’s really important—celebrating the holidays and creating special memories with family and friends.