The holiday season is officially upon us, and you know what that means, right? Well, it means lots of things, really. For most, It means holiday tunes on the radio, twinkling lights and decorations, spending time with family and friends, preparing and eating gluttonous amounts of food, giving and receiving gifts, anxiously awaiting Santa’s arrival (if you’re a kid)…doorbuster deals on Black Friday. Yeah, as warm and cozy as the holiday season is meant to be, it’s not without an underlying air of commercialism.
One of the best parts of the holiday season, for me, is finding the perfect gifts for my family members and friends. There’s nothing like seeing someone’s face light up over something you thoughtfully picked out for them. Unless you’re super crafty, however, and make all of your gifts by hand, getting gifts for everyone on your list also involves spending money.
According to a survey from the American Research Group, Americans plan to spend an average of $929 on gifts this holiday season. And that doesn’t factor in all the hidden expenses like decorations, wrapping paper, and food. It’s no wonder that although the holiday season is meant to be a happy time of year, it can also be a very stressful one, especially for anyone struggling with their finances. According to a survey by Harris Poll on behalf of SunTrust Banks, 40% of Americans feel pressured to overspend during the holidays. Additionally, 53% of parents with children under the age of 18 feel compelled to spend more than they can afford. All this overspending can lead to major debt and an unneeded source of worry and stress. So, how can it be avoided? The answer may be an obvious one, but it’s all about budgeting. Know exactly how much you can afford to spend and set a budget for yourself so that you don’t overspend. Here are some simple tips for keeping your spending in check:
- Set a limit for each person on your list. Make a list and check it twice to find out who’s naughty and nice. In all seriousness though, it’s great to have an overall budget, and you definitely should, but it will also help you avoid exceeding your budget if you make a list of the people you’re buying gifts for and set a maximum amount to spend on each person. For instance, it may make sense to spend $100 on a family member or significant other, but you probably wouldn’t spend that much on a teacher or friend.
- Keep track of your spending. Every time you make a holiday purchase, write it down and factor it into the budget you set for yourself. You may want to keep a spreadsheet. Do this every year so you can compare this year’s spending with previous years and remind yourself who to buy gifts for.
Avoid impulse-buying and extras. A National Retail Federation (NRF) survey found that 57 percent of consumers will buy something for themselves while out shopping for others. It can be tempting with so many great promotions and deals this time of year not to treat yourself with a little something special or splurge on extra indulgences like hot cocoa on a cold day. But keep in mind that you will most likely be getting gifts from other people, so you should hold out. Plus, if money is tight, you can do without those extras.
Communicate with family and friends. It may seem like an awkward conversation, but there is no shame in discussing with your close friends and family members how much you plan to spend on each other. In fact, they may even thank you for it, because it will take the pressure off them as well!
When it comes to sales, proceed with caution. You may not always be getting the best deal even when you think you are. Promotions and sales are all part of a commercial ploy to get you to spend more money. Even though you may be able to save a lot of money making large purchases on things like appliances and electronics on Black Friday or Cyber Monday, don’t make frivolous purchases just for the sake of getting a good deal. Most retailers have sales all throughout the holiday season, so don’t get roped into spending money on these big sale days “just because.”
Make a budget for everything else. Remember what I said about added expenses like decorations and food? Make sure you factor these into the budget as well.
Plan ahead. “If you start to feel impulsive and tempted to spend more than you can afford, remind yourself that the end of the year does not mean that you start with a clean slate in January,” says Michael Cunningham, Ph.D., a social and personality psychologist in the communication department of the University of Louisville. Think about how much money you’ll need to have in your account going into the new year to feel financially secure.