6 Steps to Avoid Holiday Overspending
Whatever you celebrate during the holiday season, most of us have one thing in common: holiday overspending. It’s a time for getting together and showing thanks and appreciation for family and friends, but if you’re not careful, that can turn into a budgeting nightmare.
A national survey by Experion shows that people tend to agree. Of the participants surveyed, 56% said they spend too much during the holiday season, while 55% felt stressed out about their finances during the holidays.
Here are six tips for how to stay on track financially this season, so you don’t end up dealing with holiday overspending.
1. Know how much you have to spend.
This is the most important step to avoid holiday overspending. You need to know how much you have to spend in the first place. To find that out, calculate your budget for the month as you normally would (hopefully you do this regularly anyway!). Take care of all bills—don’t miss your mortgage to pay for gifts.
Some people receive holiday bonuses, extra paychecks or some other form of additional funds at the end of the year, so be sure to include that too. Once you understand your situation, set a reasonable spending goal.
2. Make budgets for each gift.
Chances are you know pretty early on who you need to shop for. Before the mad rush starts (pre-Thanksgiving if you’re really serious!), begin making a list. You don’t have to check it twice like Santa, but make sure to include everyone you want to buy presents for this year. Then assign a budget to each gift.
Maybe you’ll spend $100 on a nice watch for your spouse, but $20 on a cat figurine for your great-aunt Sue. The key is to know how much you want to spend before any of the spending actually takes place.
3. Stick to the budget.
It’s a giving season, and you might feel tempted to give more than your means. But making a budget doesn’t help if you don’t stick to it.
The biggest key to keeping your budget is to make planned purchases. You’ll probably spend a lot of your time in stores or browsing retailers online, and it’s going to be tempting to buy unexpected items that seem perfect for your friends and family. But don’t pull the trigger right away! Check back with your budget and make sure that’s what you want to spend your money on.
Does your uncle really need that retro lava lamp, or is that leather wallet you’re planning on buying him ultimately a better gift?
4. Include decorating and wrapping costs.
Chances are this has happened to you. You stay within budget on your initial purchases—but then you need wrapping paper and boxes and bows and tape. But that point, you’ve spend $50 more than you meant to, and you’re in holiday overspending territory.
When you’re making your budget, be sure to include money for decorations and wrapping supplies. If you want to buy a real Christmas tree, for example, you need a column for that in your holiday budget. Need ornaments or a Menorah? That goes in the budget, too. If you’re not careful, these hidden costs can sneak up on you and push you right into overspending.
5. Avoid credit card debt at all costs.
The holidays have unfortunately become a time for making purchases first and worrying about the consequences later. That can mean loading up your credit card with thousands of dollars—money you don’t really have.
It might feel fine in the moment, but when the interest rates start stacking up and your monthly payments get higher, it will be difficult—and could have lasting consequences on your financial stability and credit.
So, once again, spend within your means. If you’re having trouble creating a good holiday for your children with what you have, try reaching out to any non-profits in your area. There are many toy drives and things happening this time of year, and there’s no reason to feel ashamed of taking advantage of them. Some sell the toys at a discounted price, while others give them away. You can also check in with stores that sell gently used goods and toys.
6. Remember what the holidays are about.
It’s easy to get caught up in the need for stuff during the holidays. But it’s important to remember that these traditions exist for a reason separate from consumerism.
For some it’s a religious belief, and for others it’s a time to get together and show love and appreciation for family. No matter what the holidays mean to you, remember that it’s not about getting the best or nicest things for the people you love. In fact, sometimes the greatest gifts come free or handmade. It’s about making the holidays count for the people around you. You don’t have to indulge in holiday overspending to make this a good time for your family and friends.
So, follow these steps to have a happy holiday season—and avoid the fallout of overspending when the new year hits.