It may be the most wonderful time of the year, but the holidays can also be a major minefield for anyone who wants to have cash left over at the end of it. And as much as you may start off with the best intentions to stay within your budget, it’s all too easy to be blinded by the glitter and glam. If you can commit to just a little more self-restraint this year though, it is possible to manage your finances without overstepping your savings account into dangerous territory.
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Boundaries and Limits
There are few things better than taking advantage of a good deal, especially when you tally up all the savings in your head. However, it’s a mindset that can get you into trouble if you have a set amount to spend on holiday gifts.
When you’re coming up with an overall budget, remember that your personal total should be based on your income, monthly expenses, and future savings goals. It’s not an amount that can be massaged or adjusted just because of a Buy One Get One offer. (If you’re looking for concrete numbers, it may be helpful to know that the average household makes about $50,000 a year and spends around $800 on Christmas gifts.)
The next step is assigning a numerical figure to each category of spending. For example, you want to spend between $200 and $300 on a used video game console for your 10-year old. Breaking it down this way helps you not only see where most of your budget is going to, but it also makes it easier to find products that fit your price range.
When searching for gifts inside your ideal price range, remember that not all discounts are created equal. Many retailers will artificially inflate their prices just to make them look lower when November and December roll around. There will be no end of retailers shouting from every corner about how great their deals are, but savvy shoppers can silence their hype. There are plenty of deals out there, both from private and commercial sellers, but it will take some research and planning to separate the actual sales from the noise.
Avoid Credit Cards
Shopping with cash may be cumbersome at times, but it’s a trick that can save you hundreds of dollars by the time you wrap up your shopping. A credit card is a piece of plastic that can be brought out again and again, making it easy for shoppers to forget they’ll eventually need to pay all of that money back (maybe even at a high rate of interest).
On the other hand, cash is a finite resource, an actual presence inside your purse or wallet. When you shop, you can see the wad of bills thin with each purchase. It’s a psychological mind game powerful enough to help you push pause when you’re starting to feel like you’ve lost control of your original goals. It may even help you stay away from all those amazing online deals that show up every day in your inbox!
Track and Spend
You won’t see a lot of people pulling out a spreadsheet when they’re out shopping, but taking a budget sheet with you can help you stay on target when it comes to managing your expenditures. If you have to make last-minute adjustments, tracking each and every purchase can show you where you can trim the fat so you can splash out on other items.
If you’re feeling really ambitious, consider scaling back on your own spending right before the big day. For example, if you spend about $150 on going out to eat every month, tighten up the budget by a third so that you have $50 to devote to your holiday shopping that won’t come out of your savings or checking account. Doing this before the holidays can even help you develop smarter spending habits all-year round.
Your mailman, your newspaper carrier, your son’s kindergarten teacher — it’s all too common to forget someone on your shopping list. Experts recommend purchasing several extra (inexpensive) holiday gifts when you’re out and about so you don’t end up rushing to buy something last-minute.
When you’re rushed, you’re more likely to spend more than you wanted on a gift that is ultimately a token of your appreciation. An even better tip is to buy presents for your all-time favourite people and bake cookies for everyone else. You’ll feel more relaxed as the season starts to ramp up, and you can avoid the crowds of frantic shoppers the night or two before the big day.
Focus on Customized Gifts
There have been a lot of studies about how much derived pleasure people actually get from expensive material things, and the answer is that it’s much less than people expect. Instead of spending a lot of cash on the latest and greatest electronics or fashions, consider putting together a customized package that will really speak to the recipient.
You can also focus on experience gifts, but be careful of this particular tactic — they can cost more than a material gift if you’re not careful. Instead, pay attention to the real pain points in people’s lives as a way to get better gifts without breaking the bank. If your father has an old sun-faded photo of his grandparents, you can potentially get it restored for less than the cost of yet another tie.
It may be obnoxious to hear people remind you that Christmas isn’t about how much you spend, but it really is the truth. You can show the people you care about just how much you love them without having to go overboard on your budget. All it takes is a little budgeting prowess and a few mental tricks to help you make smarter financial decisions.