Monday, November 22, 2010
Keeping your holiday spending in check can be difficult. The thrill of shopping and the spirit of giving have a tendency to overshadow other financial goals like saving and reducing debt. The result is often a stressful holiday followed by weeks or even months of budget damage control. If you'd like to do things differently this year, try following some of the following budgeting tips.
Make a List and Check It Twice
Make a list of the people you would like to buy gifts for. When you've finished, put a checkmark next to the people you HAVE to buy gifts for--your mother, your children, etc. Focus on the checkmarks and consider sending the other people cards, letters, or other small tokens of appreciation. Not everyone needs (or should get) a large gift from you when you're on a budget.
Set a Budget and Stick to It
You should know how much money you have to spend before you begin shopping. Set an individual limit for each person and stick with it. Doing so will help you avoid overspending once you are in the store. It is also a good idea to account for items like cards, wrapping paper, gift bags, bows, and last-minute or unexpected gift giving. These things can add up and easily put you over budget.
Leave the Plastic at Home
A lot of people shop with their credit card and pay their bills later. You should avoid doing so if at all possible. Paying in cash makes it easier to keep track of what you are spending and stay within your budget. If you don't have enough cash to shop or do not plan on paying off the credit card bill right away, you may want to reconsider your holiday budget. A $1,000 shopping spree charged to a credit card with an interest rate of 19 to 20 percent can take up to six years to pay off if you only make the minimum payment. Are the gifts really worth that much?
Look for Deals
There are so many sales around the holidays that you should refuse to buy anything unless you are getting it at a discount. Every store has sales. You can also find store coupons, product promotions, free shipping codes, and other discounts online. Another option is to buy from auction sites and alternative retail outlets. These places almost always offer good deals on both new and lightly used items.
Get the Best Price
Getting a deal is great, but getting the best price is even better. Use comparison shopping sites like PriceGrabber.com and NexTag.com to see which stores are offering the lowest price on the items you are looking for.
Gifts do not have to have huge price tags. In fact, the nicest gifts are often sentimental and low cost. Consider putting together a scrapbook, memory book, slide show, or some other type of homemade memento for your loved ones. They will appreciate your efforts so much that they won't care how much the gift cost.
Donate to Charity Instead
If you are looking for ways to trim your holiday budget but don't want to forgo your charity donations, you could always skip the gift giving and donate in a loved one's name. You can also ask loved ones to donate on your behalf rather than buying a gift for you. This will keep the spirit of the holidays alive and reduce the number of post-holiday gift returns that always occur because someone got something that they didn't really want or need.
Plan for Next Year
The best way to get through a holiday on a budget is to plan ahead. Try saving a bit of money each month in a special account so that you don't feel the holiday money crunch all at one time. You can also try buying gifts throughout the year--you'll beat the shopping rush and still have an opportunity to buy things as they go on sale.
Guest post from Bailey Harris, financial writer and Homeownersinsurance.org contributor