It’s that time of year again. From Black Friday to December 24, shoppers around the country will hit the streets in search of gifts for relatives, friends, coworkers and perhaps a neighbor. This is often called the most wonderful time of the year. But for many people, it’s the most stressful and expensive time of the year.
Between pressure to buy gifts and spending money you don’t have, the month of December can wreak havoc on your personal finances—but it doesn’t have to. There’s no rule that says you have to spend crazily and dig a financial hole for yourself. Yet, this is a choice many people make on their own. If you’re sick and tired of ending every year in the red, here are simple strategies to ensure sticking with a budget.
Budget for Everything, Not Just Gifts
If you participate in end-of-the-year holiday celebrations, then you probably know that expenses this time of the year often go beyond actual gifts. Many people also entertain more and enjoy more outings with family and friends. Whether you’re planning meals for a group, eating out or spending money on gas and hotel accommodations, be realistic about your costs. Make a list of upcoming events for the month and estimate how much cash you’ll need in total.
Some people make the mistake of only budgeting for gifts during the holidays. And because of this, they’re unprepared when other expenses creep up. If you don’t prepare your finances for additional expenses, you might rely on a credit card to fill gaps in your budget and get into debt.
Shop with Cash and Only Bring What You Need
I always read and hear stories about people who use their credit cards during the holidays and then regret their purchases in the new year. If you’re a generous person, you may enjoy purchasing gifts for loved ones, especially for those who’ve had a positive impact in your life. But you shouldn’t go into debt to put a smile on someone’s face, especially when there’s the risk of buying a gift that misses the mark. In other words, the person may never use or barely use the gift. The gift could sit in a corner collecting dust while you spend the next few months or longer paying off the credit card balance.
If you’re exchanging gifts, shop with cash and only bring what you need. Leaving your credit card and debit card at home removes the temptation to overspend. Plus, when you commit to only using cash, this limits how much you’re able to spend, which means you might have to condense your shopping list.
Don’t feel guilty about only shopping for a few key people. If you absolutely don’t want to exclude someone from your list, give a greeting card or bake a batch of cookies. It’s the thought that counts anyway. Both options are inexpensive and show that you were thinking about the other person.
Shopping online can also help you stick to a budget. Online shopping makes it easier to compare prices which can save you money. Sites like Ebates let you earn cash back when you shop, which allow for additional savings (click here for more details). If you already know what you’re looking for, you can go directly to a retailer’s website, make your purchase, and move on with your day. On the other hand, it’s harder to stay focus and only browse items on your list when you shop at an actual retail store.
Between sales and advertisements, you can become sidetracked and begin wandering down aisles. The more you look, the more items you’ll want to buy. You could even get caught in the excitement and purchase a few items for yourself that you don’t need, completely blowing your budget.
If online shopping isn’t an option, one trick is to shop for gifts when you’re busy or pressed for time. Since you have to get in and get out quickly, you don’t have time to window shop or make impulse buys.
Keep Track of Expenses
Sticking with a holiday budget can only happen if you track your expenses throughout the entire month. Keep a spreadsheet or copies of your receipts or use a free online tool like Personal Capital. It’s easy to lose track of how much you’ve spent when you don’t keep a record. After each shopping trip, calculate how much you’ve spent thus far and subtract this amount from your total spending budget. Or log into your Personal Capital account and take a look at all your expenses in one place. Once you’ve hit your max, stop shopping.
Bottom line is that nobody can make you overspend during the holidays. You are the only person in control of your personal finances, and you’re the one who deals with the consequences of blowing your budget. So it’s important that you don’t allow the expectations of others to influence your spending.
How do you stay on track with your holiday spending?