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6 holiday spending tips
Now is the time to start financial planning for the holidays
In 2018, holiday shoppers spent a total of $707.5 billion on gifts, decorations and other holiday must-haves – an average of about $1,000 per person. Where does that money come from?
Unfortunately, most people haven’t saved a penny for gifts. Depending on the current state of your financial planning, this could set you up for a holiday spending hangover.
Even if you’re just now realizing that your holiday expenses put you in a financial bind, it’s not too late to protect yourself from some scary credit card bills. Here are a few holiday spending tips to ensure you start out the New Year right.
1. Begin financial planning for the holidays – now
This doesn’t have to be a buzzkill; the bill in January, that’s a buzzkill. Take an honest look at your finances and determine how much you can spend on gifts and decorations this year. Depending on what that number is, you may have the opportunity to get creative in your gifts this year.
Make the most of the pain you’re feeling now over your lack of planning and start planning ahead for next year. Earmark a small amount in your spending plan each month for next year’s holidays, and by the time you get there, you’ll have a cache waiting for you. Spend cash whenever possible to help you keep track of how much of that budget you’ve spent and to really feel how much the purchase costs.
If you want more room to play in that spending plan, you may want to consider taking a second job or working overtime over the holidays. Toy and game stores increase their staff by as much as 38% around the holidays, and there are more co-workers looking for someone to cover a shift or project for them.
Now is the time to put those credit card points to work, helping to expense your travel or even give you cash back. After all, that bonus was why you signed up anyways, right?
If you are so blessed as to receive a holiday bonus, set aside a percentage to help you cover the extra costs – or an extra little something for yourself – and then invest the rest to help you reach those financial goals faster.
2. Make a list – and check it twice
It’s understandable that you want to buy a gift for every family member and friend, especially if you have a lot of nieces and nephews. But if you have a large family, this can add up fast. It’s best for your holiday spending budget to limit your spending to your immediate family and only a few other loved ones.
You don’t have to label people as “naughty” and “nice,” but it is essential to create and stick to a list. Do you really need to get Bob in accounting a present? Maybe Bob would enjoy your grandma’s secret-recipe Christmas cookies or homemade sugar scrub instead of the fifteenth bobblehead for his desk. Even extended family members don’t necessarily need a physical gift. Giving your time and love can be more than enough.
3. Be generous in spirit, not holiday spending
All of your loved ones deserve a gift this holiday season – making a list isn’t about being stingy. It’s about prioritizing your holiday spending. It’s better to give a thoughtful gift within your means, and seek to bless them, than to have a relationship in which you keep score. Friends and family often prefer the gift of an experience with you instead. Give your time to help your great aunt clean her house or make small repairs. Offer to watch your nieces and nephews for a night for free. Get together with grandma and let her show you how to make her favorite recipes. For acquaintances and coworkers, bake a large batch of cookies and bring them in for everyone to enjoy.
If you are really set on getting someone on your list a gift outside your means because you know how much they’ll love it, see if there are one or two other people who would want to go in on the gift with you.
4. Be mindful of “small” holiday expenses
Don’t give into the indulge-a-little mindset that is so easy to fall into this time of year. So often we waste money in areas that don’t give us as much enjoyment as we initially think. The extra latte here or extra sweater there, all in the spur of the moment, does add up. Keep both the extra pounds and the extra bills at bay by reminding yourself of your goals.
You’ll be thanking yourself that you don’t have to work extra hard in the new year to make up for those things that didn’t even bring you much satisfaction now. Changing your mindset to focus on your long-term goals rather than short-term gratification is essential not only to saving money this holiday season, but also to achieve total financial freedom in the future.
5. Keep emotional holiday expenses in check
It is so easy to get caught up in the trap of “keeping up with the Joneses” and spending more than we should on extravagant gifts or having the best-decorated house on the block. Take a few minutes – or even a few days – before you buy to check-in with yourself emotionally and make sure that your fulfillment levels on a purchase match the price you are paying for it.
If there is someone in your life who always gives you extravagant gifts, accept them in the spirit of generosity in which they were given, but don’t feel an obligation to reciprocate with a gift of equal value. You don’t need to out-buy everyone in your life. In fact, if exorbitant purchases lead to a begrudging attitude toward your friends and family once the bill comes, it will only harm your relationship.
6. Become an expert deal-finder
A record number of shoppers hit stores on Thanksgiving weekend in 2019: 189.6 million, to be exact. What these shoppers may not know is that Black Friday and Cyber Monday are not always the best time for deals. A NerdWallet study found that most retailers repeat the same deals as the previous year on at least some products, and that major retailers offer even better deals earlier in November, before Black Friday.
Adobe Analytics data backs this up, showing that many deals hit their peak before or on Thanksgiving. Online shopping offers better bargains than in-store, but it also depends on what you’re buying. Cyber Monday may be a good time for deals on electronics, but not for sporting goods or toys.
There is one thing nearly every shopper can agree on: 50% of consumers planned to shop after the holidays in 2019 to take advantage of holiday sales. They’re smart: This is actually the best time to start thinking about next year’s holiday spending. You can also take advantage of the after-Christmas sales to stock up on wrapping paper, decorations and Christmas cards for next year when they are at their deepest discounts.
To curb holiday expenses and get the best bang for your buck, monitor deals at your preferred stores year-round, and especially in early November and after December 25. Start looking for gifts for those on your list throughout the year. Having half your list taken care of before Black Friday rolls around next year will minimize financial strain and last minute gift-finding stress. Just make sure you keep track of your list and remember where you hid the gifts!