A few weeks ago, we posted an article about managing your money as the holidays approach. Nothing is worse than the reality check of opening the credit card bills from all the overspending you did during the holidays. And here we thought putting on those few ‘holiday pounds’ was the only problem! The good news is that it’s never too soon to start being smart with your money. It’s never too late, either. So, let’s get down to business!
Consumer Finance Protection Bureau recommends that you avoid holiday overspending by:
Making a spending plan. Be honest about what you can really spend. Not everyone needs a tangible gift purchased with money and people often appreciate things that don’t have a price tag. So, make a plan and work within that plan. Get creative: offer childcare, house cleaning, make dinner, or get crafty!
Make a list of gift recipients. Plan, plan, plan! If you make your list early, you have time to search for good deals instead of settling for what is available at the last minute. If your list seems long (is every member of your extended family on the list?), consider doing a drawing of names or make a family game where gifts are anonymous, like “Secret Santa”. This can be a great opportunity to bond and minimize cost when your recipients have common connections. If your budget is tight, but you feel like you have to purchase gifts, try to prioritize who needs something purchased instead of something homemade. Shop online and compare prices if you have specific gifts in mind.
Keep track of what you spend. If you save in one area, you can shift that savings to other areas of your holiday gift budget! Don’t forget to look for coupons. Many paper coupons can be redeemed online and vice versa. Consider putting any money saved into a retirement or savings account!
Avoid impulse purchases. Shop online to avoid the temptation of shelves crowded with overpriced stocking-stuffers and last minute purchases that you didn’t plan on. When you are in a store, stick with your list! Think twice about window shopping, the occasional splurge, or spoiling moment in an effort to keep more money in your wallet until after the holidays when you are back in a predictable spending routine.
Leave your credit cards at home. Using a credit card almost immediately busts your budget, or at least allows for too much temptation. Make a budget that fits within what you can afford in cash. If you will be purchasing on credit, make sure you have a pay-off plan that you can stick to. You can even save a little extra money elsewhere by making a creative spending plan in advance, like purchasing gift cards for an expensive item when those gift cards offer savings on something, like gasoline. Many stores, like AAFES, offer free or reduced fee layaway prior to Christmas. Always check your local installation exchange to see if they offer a layaway program.
Check details when purchasing gift cards. Some gift cards have special use requirements, like deadlines by which the card expires or fees for not using them within a specified amount of time. This impacts the useable value of the card, so check in advance for full redemption value.
There are lots of great ideas out there about ways to save, but I love this one from Military Saves: start a savings plan in January 2014 to budget for your gifts for next year! This is the perfect time to analyze how you spend during the holidays and put a realistic long term plan together that will have less of an impact on your pocketbook and relieve some of your financial stress.
What tips and tricks do you use for holiday spending and budgeting?
Posted by Brooke Goldberg, Government Relations Deputy Director