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For many families, the holiday season does not end with the New Year but lingers on for months. Credit card bills arrive shortly after the festivities, and many are not paid off until the summer. In a survey conducted by the National Retail Federation, over two-thirds of American families do not know the true cost of their own holiday celebration—and if they did, they’d be shocked.
Consumers spend more money during the holiday season on presents, travel, and entertaining, than at any other time of the year. And much of that buying is done on credit, at high interest, which can lead to major debt and finance problems for months or even years to come. To fight the seasonal spending spree, we’ve compiled a few tips that will help you be generous without inviting disaster.
If you want to save money, this is the time to make your resolutions—not after the New Year.
Reflect on last year. If last year’s shopping season was a budget-disaster, then now is the time to learn from your mistakes. Take a look at your holiday bills from a year ago and think about whether your financial situation has improved or worsened since then. Be honest with yourself, and start thinking about how much you can realistically afford to spend.
Set a budget. And stick to it! It is easy to get swept away in the holiday spending frenzy. Designate a specific dollar amount for each item or person on your list.
Track receipts. You will need them for returns, price adjustments, and to compare against your credit card statement. Knowing how much you spent will keep you honest and help you plan better for future holiday shopping.
Limit the use of credit cards. Unless you know you’re good about paying off your credit balances in full each and every month, leave the plastic at home. Only bring cash you’ve set aside for holiday shopping to avoid temptations for unnecessary purchases. If you must use credit this year and know you won’t be able to pay everything off right away, try this approach: Don’t rely solely on credit; make a plan in which you pay your purchases off completely within two to three months; and limit your credit card use to the card in your wallet with the lowest interest rate.
No emotional purchases. Let’s face it, if you’re stressed out, you might make some unnecessary purchases. Take the emotions out of your holiday shopping, and stick to your original holiday budget. Having your budget in hand and a game plan for who you are buying for and what you want to buy can help make the daunting task of shopping a bit more manageable. It’s also worth doing a little online research and comparison shopping before leaving the house, so you don’t get caught up on the hype of the holiday sales.
Related: Beware Holiday Shoppers. Retailers Warn of Stealthy Credit Card Stealing Malware
So why not take a different approach this year? By following some of these tips ahead of time you’ll be able to balance your gift giving and still avoid that holiday debt hangover.
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