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October 01, 2019 | money-management

Christmas on a Budget: 7 Steps To Smarter Holiday Spending


It happens every year. After months of endless searching, you finally found the perfect gifts for everyone in your family - only to check your bank accounts on December 26 and realize you blew up your holiday spending goals in the process. There’s good news, though: just because you’re celebrating Christmas on a budget doesn’t mean you have to corners with your loved ones. Putting a little extra thought into your holiday spending means knowing where you can and can’t save money. These seven steps will help you get there:

Step 1: Review Your Records

Many consumers are enrolled in online banking or have old credit card statements. Dig out records to determine where your money went last year. Reviewing funds spent on gifts, groceries, dining out, and vacation travel could help you spot where you went overboard and can afford to cut back.

For example, if you spent a fortune traveling to a Colorado ski resort or Hawaii for a beach vacation, consider a getaway closer to home or delay traveling until a more affordable time of year. If you see significant expenses at restaurants, consider making a pact with family and friends to take turns hosting big holiday meals and turning them into potlucks.

Step 2: Make a Plan

Before you shop, build a budget. Identify who you will be shopping for this year, the items they want, and your per-person budget. It’s also a good idea to account for other expenses, such as travel and special holiday foods. Identify your revenue sources, calculate your spending limit, and stick to it.

Remember that you aren’t obligated to give everyone a gift. If your shopping lists include more than a handful of people outside your immediate family, consider a thoughtful yet less expensive gift, like some homemade goodies. You might even think about giving your time instead — offer to watch your neighbor’s kids so they can have a night out on the town. Or, you could teach your niece how to make your grandmother’s special fruitcake. After all, most people appreciate something heartfelt over an expensive (and soon outdated) gadget.

If you have a large family, think about a Secret Santa exchange, where each relative draws the name of another and buys a gift only for that person. If you’re shopping for a couple, consider getting something they can both enjoy (instead of individual items for each).

Step 3: Avoid Impulse Buys

Retailers spend enormous sums promoting holiday sales - especially on Black Friday, the big shopping day after Thanksgiving Day. But scratch the surface and you may find those deals are not necessarily what they’re cracked up to be.

Use price-tracking programs to monitor the prices of goods from reputable merchants. Other mobile apps can help you track your recent purchases and monitor sudden price reductions that could net you a refund or alert you to product recalls.

Step 4: Use Coupons and Coupon Codes

The days of sitting at your kitchen table and cutting out coupons are over. These days, retailers offer customers a variety of ways to collect online discount codes and save. Signing up for a mailing list will often unlock an exclusive discount code; if you’re not afraid of some online ads, you can also visit a company’s Facebook or Instagram accounts to receive additional offers. Some shoppers will even add an item to a store’s online shopping cart to see if they get emailed a special coupon intended to nudge them over the edge.

Less interested in specific businesses and more interested in good deals? No problem! Companies like Retailmenot and Honey can also help you find coupon codes during the holidays that may not otherwise be sent to you. Even better, these sites can help you find the best deals for you and your family all year round.

Step 5: Be Careful With Credit Cards

Credit cards are handy, but they can also leave you in debt if you don’t pay off the full balance at the end of the billing cycle. According to the Federal Reserve, cardholders who carry balances pay an average annual percentage rate of close to 14% in interest. Carrying a balance will drag your holiday spending far into the new year.

One of the best strategies for avoiding holiday credit card debt is to set up a dedicated holiday savings plan. Putting money aside in advance, even for a few months, can ease the burden. What’s more, having a firm budget can help you make smarter shopping decisions. If you know you only have $500 to spend on Christmas gifts, you’re less likely to splurge on that $400 electronic device for one family member.

Step 6: Save for Large Gifts

If one or more gifts are a big purchase, plan to set some money aside each month to fund your holiday shopping. If you’re planning to give your teenaged son a new laptop, for example, you’ll thank yourself for already having some of the funds ready.

And don’t shy away from using little mind tricks for your holiday savings. When you save money toward a holiday spending fund, you can think of it as putting your holiday spending on layaway in advance. Or, you could think of it as getting a down payment together for your holiday spending. Use whatever trick(s) work for you to be prepared in advance and not regret your purchases next year.

Step 7: Learn from Past Mistakes

Essayist George Santayana wrote, “Those who cannot remember the past are condemned to repeat it” — that applies to holiday spending, too. Use the lessons you’ve learned from past years to give yourself the gift of a debt-free holiday season. And remember: no amount of money can overcome a gift that comes from the heart. Celebrate the passions of your loved ones and you will always get the gift of their dreams.

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