Six Ways to Better Manage Your Holiday Spending

by Spero Financial

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Americans impose undue pressure on ourselves when it comes to holiday gift-giving and other holiday season expenses like travel, parties, and special family meals. Overemphasizing gifts, especially, can add a sense of frenzy and desperation to a time that should be full of love, laughter, and making memories. The last thing you want to do during the holidays is overspend, go into debt, and knock your family’s budget off-kilter.

Where’s the joy in having a wonderful month of celebration with loved ones only to have it overshadowed with the stress and guilt of spending money you don’t have?

Top Tips to Shop Smarter This Holiday Season

This year, avoid the financial blues in January by being careful with your green in November and December. With a little planning ahead, you can keep your budget intact, feel great about your celebrating and gift-giving, soak up your holiday fun, and still start the new year off on the right foot. Follow these six strategies to spend and give smarter this holiday season:

1. Plan and save ahead

One of the first mistakes families make is forgetting to plan for holiday spending. By default, the budget becomes whatever money is lying around when it is time to shop, or worse, all or most of your holiday purchases end up on credit cards. Don’t charge your holiday purchases, unless you have intentionally planned it that way and plan to pay off the debt quickly after the season has passed.

The first step is to figure out how much money you should allow for holiday spending including gifts, food, and travel. A good goal is about 1.5% of your annual income. For the average American family with roughly $50k annual income, that means you can spend close to $800 on your holiday celebrations. Or $67/month into your holiday savings fund. Seems doable, but the average American family spent $967.13 on gifts alone in 2017. Of course, it’s alright if you want to spend more on your holiday celebrations, as long as you plan for it. If you’re trying to save but are coming up short, look at ways money is leaking out of your pocket for java, eating out, and entertainment and put that money toward holiday spending.

2. Make a list of everyone you want to give to

We all have friends and family we love choosing gifts for during the holidays, including our children, spouse, siblings, parents, other close family members and beloved friends. But most of us have others that make the list as well, such as school teachers, neighbors, and people from church.

If you don’t make a comprehensive list, you underestimate how much money you need to save for holiday shopping, which can lead to stress, frustration, and possible debt. So make a good list and decide about how much you want to spend on each of those people. Remember, if your budget is getting tight, your friends and family will treasure homemade eats and treats as well as your doing special kindnesses for them that cost nothing. Not all gifts come from the store, after all.

3. Anticipate parties, special meals, and visits to grandma

While you may not know exactly how many parties you (and your children) will be invited to, don’t forget to put together at least a ballpark budget for those parties. The budget could include food, wine, and party favors, just be sure to account for these items as part of your holiday spending.

Likewise, if you plan to visit out of town family or go on a special trip, budget for it. Don’t get caught off-guard.

4. Shop All Year Long

A surefire way to blow your holiday spending budget is to do all your shopping at once. While it might be exhilarating to wake up at the crack of dawn on Black Friday or some other day during the holiday season and head straight for the mall, mocha latte in hand, shopping this way puts a lot of pressure on you to find all the right gifts under the gun, without enough time to use discretion on spending. The later you wait to shop, the more likely it is that you will settle for gifts that are not necessarily what you had hoped to buy, and also beyond your budget. This haphazard, last-minute approach leaves little opportunity for comparison shopping, which is an important component of wise holiday spending.

A great alternative to this frenzied method is to keep a gift file open in your shopping brain all year long. Any time you are out and about and happen upon that perfect something for that perfect someone, buy it then (especially if it is the right price!) and tuck it away in your closet or in a bin under your bed. Keep a record of gifts you purchase throughout the year and incorporate them into your shopping list and holiday budget so you stay on track.

5. Keep a Goodie Drawer for those last-minute, unexpected gifts

It happens to all of us. We get a last-minute invitation to a party, or a surprise visit from an old friend or far away relative and all of sudden we feel the need to have a Christmas present for them. We don’t even mind in theory, but we get caught unprepared with no time to shop. This is where the Goodie Drawer saves the day. Have a drawer or shelf in your home designated for a last-minute gift supply. Keep a small inventory of common things many people use or enjoy. Nice candles, blank journals, fun picture frames, specialties from local artisans like hand-thrown mugs, etc. Though this might feel impersonal, it is far better than feeling empty handed with no time to shop—or the other extreme, shopping under pressure and then overspending. If you’re really on the ball, you can even pre-wrap them or keep gift bags and tissue on hand.

6. Consider alternatives to spending money for gifts

Now we’ve come to one of our favorite parts. Think outside the gift box. There are countless ways to express your love for friends, family, and special people in your life without breaking the bank. What are your special gifts or talents? Do you knit or do woodworking? Maybe you’re a poet or a musician who can share words or music with those around you. Most of us can recall a special personal gift someone made for us or a special deed they did for us, and often those are the most precious gifts we treasure. Those are the kind that truly come from the heart. So if your holiday budget does not allow for you to spend what you were hoping for gifts, then give the gift of time, talent, or deed and know you will be deeply appreciated.

Spero is invested in your financial health for the long term, and that includes helping you prepare for short-term spending goals like holiday expenses. We are here to support you as you learn and implement savvy spending and saving strategies. Come into one of our convenient branches and let us introduce you to our Christmas Club Account so you can start saving today and get your holiday bucks in a row!

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