Avoid Overspending This Holiday Season
It can be challenging to make ends meet; in our hearts, we all want to do more for our families over the holidays. Still, it’s wise not to overspend and to avoid the headaches of hurting yourself financially.
According to data from the National Retail Federation (NRF), Americans spend an average of $997.73 on gifts and holiday items each Christmas. This amount is comparable to what the average person earns weekly in our country, and most dollars are spent on gifts. And with today’s rising inflation, that amount will likely go up. (Read more here.)
Breakout of dollars spent:
Source: GoBankingRates, National Retail Federation, YouGov
There are ways to take control of what you spend. It means preplanning, setting a budget, and keeping spending in check.
How to take control of your spending:
Christine DiGangi, writing for U.S. News & World Report, reflects that the holiday season in America has become a months-long shopping extravaganza…While it’s not uncommon for Americans to rack up some debt during the holiday season, there are ways to avoid complications because of it.
DiGangi shares seven tips to keep spending down:
- Set a SMART Budget for Yourself
Avoiding debt requires a plan. “A budget is a goal, and many organizations and leaders use the SMART acronym for setting goals,” says DiGangi. “The letters in the acronym stand for Specific, Measurable, Achievable, Realistic and Timely.”
She explains how it works with budgeting: “Specify the amount of money you have to spend during the holidays and measure your progress by writing down transactions, checking your credit card account and reviewing your bank statements. The achievable and realistic parts of budget goal-setting go hand in hand: Seriously consider how much you can afford to spend and set yourself up for success by adjusting your shopping plans. If you want to stay on budget, you may have to get creative in your gift-giving. Finally, make sure your budget is timely.”
- Don’t Add Debt Without a Plan in Place
If you have to use a credit card or personal loan to shop for the holidays, DiGangi advises that you have a plan for paying it off. “Interest rates can easily multiply what you spend in December and make you pay for years to come. Budget your debt like you would your cash. Only allow yourself to accrue as much debt as you can pay off in a predetermined amount of time. If you take advantage of a zero percent APR offer, make sure you can pay off the debt before the interest kicks in.”
- Plan Your Gifts in Advance
If you’ve been planning your gift-giving carefully or purchasing gifts throughout the year, you’re ahead of the game. But if not, there’s still time for you to make a plan, says DiGangi. “Determine your gift recipients and what you would like to get each person. This way, you avoid browsing in the stores, which can lead to temptation and impulse buys that can derail your budget in a single transaction.”
- Be a Savvy Shopper
…. Many stores have the same [Black Friday] deals – or even better ones – throughout the holiday season. Once you’ve created a shopping list, do some research on where to get the best deals. Use apps and websites to get coupons and extra discounts.
- Keep Track of All Your Spending
Along with measuring your progress and maintaining your shopping budget, keep track of your typical spending to help prevent overspending in other areas. “The holidays are made even more expensive by traveling, going out to eat, seeing shows and attending other events,” adds DiGangi. “Make sure to factor these expenses into your budget.”
- Don’t Let It Get Personal
Yes, gifts should be personal, says DiGangi, but prices don’t have to be. Try not to worry about whom you spend more on because the meaning behind a gift is not always tied to the amount spent…Keep in mind the big picture. As long as you’re staying within your budget, you can allocate money however you need.
- Remember What the Holidays Are About
DiGangi concludes it’s the timeless lesson Ebenezer Scrooge and the Grinch have been telling us: The holidays are not about the things you can buy. It really is a time to spend with your loved ones and celebrate traditions.