Planning For Smart Holiday Spending

08 Dec. 2014

SantaThe countdown to the holidays is officially on! And while it’s the season of love and giving, it’s important to remember that holiday debt is the gift that keeps on taking – potentially all year long if you’re not careful.

Don’t let holiday spending take on a life of its own this year. With a little planning and dedication, you can create a joyous holiday season for your friends and family without the long-term, detrimental financial effects.

Step 1: Preparation

Make a list

Santa can’t pull off Christmas without a list and neither should you. Creating a list of recipients will ensure you don’t forget anyone and will also keep you from tacking on extra names. Keep in mind everyone’s financial situation changes year-to-year, so even if you exchanged gifts with friends in the past, it may be less stressful for both of you to skip the exchange this year.

Once you have your list compiled, make notes about who you’d like to give store-bought gifts and who should receive homemade gifts such as baked goods.

Even the cost of holiday parties can add up. Make a list of events you plan on attending, what you’re contributing to each and the cost. When you factor in the cost of a holiday ham, platter of sweets or several snack trays, it can quickly add up. An list will also help you schedule your time and make sure you’re prepared – instead of rushing to the store at the last minute.

Step 2: Budgeting

Holiday Spending WorksheetNow that you know who is on your gift list, here comes the most important part: defining what you can afford and setting an overall budget as well as an individual budget. Be sure to check out our Holiday Spending Worksheet for help creating a budget and list.  If you’re unsure where to start on a budget, think about what you spent last year and see how your finances this year compare. Fight the urge to let your heart be bigger than your bank account.

Envelope system

Once you have an overall budget, prioritize your recipient list and set a limit for each person. Then, put that amount of cash in an envelope with that person’s name. A great perk of the envelope system is that to overspend for one person, you have to take money from another.

Put away the plastic!

Using credit cards for holiday shopping can be tempting, but it’s vital to avoid charging gifts. When all you have to do is swipe a card, it’s easy to overspend. If the envelope system seems like too much trouble, just think about the bill you could get come January that might be double or even triple your budget!

Don’t have enough cash on-hand for holiday shopping? Rather than use credit cards, which could take years to pay off, think about an installment loan with a pre-set payoff period. With an installment loan you can purchase the gifts you want while reducing your post-holiday stress by knowing the exact amount of your payments each month and the exact payoff date.

Step 3: Do Your Homework

Bargain hunting

Now that you know how much you have to spend, it’s time to get to work. There are lots of great deals to be found around the holidays if you take your time and know where to look. Shop store specials, the infamous Black Friday deals and bargain hunt online before going to the store. Many stores will price match any deal you find on the Internet. Even if you can’t find a store policy, it never hurts to ask.

Coupon clipping

Check daily deal sites like Groupon and LivingSocial for great deals and discounts on merchandise as well as services and events. For people on your list who are all about the experience, a gift card to the local spa or tickets to a concert, movie or theater production are great options. You can also check StubHub and other secondary ticket sites for deals.

Many stores offer coupons that can be printed from their website and brought to the store. If you buy online, there are plenty of coupon codes to be found for significant discounts.

The fine print

Before you buy, double check the store’s return policy. Some items such as electronics, software and videos may not be returnable while other stores have limited return periods for any item. Check the fine print for gift cards too since some may have expiration dates.

Use a little elbow grease

As you research, keep in mind that the best gift may not be purchased from a store at all. You can use your talent as a gift to knit, sew, paint, sculpt, woodwork, etc. You could also spend some time in the kitchen making favorite goodies or a mid-week meal before the holidays.

Sometimes, your time is the best gift of all. Help your grandparents around the house, volunteer at the local soup kitchen with a friend or make coupon books for help a person might need later in the year.

Step 4: Work The Plan

Clothing Rack

The best deals might be found online and can also save you time and long lines. Purchase gifts from reputable sites using prepaid gift cards, debit cards or PayPal accounts—not credit cards! If you do make the rounds at the mall, remember to:

Eat before you shop

Lunch costs can add up quickly and so can those $4 coffee drinks. Eat before you shop and if you plan on being gone for a while, bring a snack and drink with you.

Refrain from buying for yourself

When you see one great deal after another – and it’s something you’d just love to have yourself – it’s tempting to add it to the pile. Instead, take a picture of the coveted item with your phone and save it as a gift idea for later.

Stick with the plan

You might see a great sweater your niece would love, but if you have already bought something for her either pass it by or return the other item first.

Be realistic

Remember that even the best laid plans needs to be altered sometimes. If regular bills are piling up and your previously defined holiday budget just isn’t realistic anymore, change your plan. Move some on your list to the handmade gift list or simply explain that you just don’t have the money this year to purchase gifts.

Step 5: Plan For Next Year

Once that last present has been opened and the checkbook has been balanced, take a look at how you did. Did you bust your budget? If so, where did you deviate from the plan? What lessons did you learn that can help you for next year? If you have outstanding debt, how will you pay it off? Remember that installment loans are a great way to take care of that debt in a short period of time.

Stock Up Now

Keep in mind that right after the holidays is the best time to purchase holiday greeting cards and holiday gift wrap for next year since they will cost you a fraction of the price.

Start saving earlier

A great way to make holiday shopping go even smoother next year is to start saving now. Putting just $20 a month into a special fund can help lessen the blow next winter.

Keep track of gift ideas

Throughout the year, take notes if you hear a loved one comment about a gift they’d love or an event they would like to attend. This way you’ll be better prepared with ideas during the next holiday season—especially for those hard to buy for people.

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