How much money do you spend each year on Christmas gifts? According to a Gallup poll of over 1,000 adults, Americans spent just over $700 on holiday gifts last year. While some people will spend less and others will spend more, no matter what your budget, it can be a challenge to control your spending.
Dr. Ross Steinman, associate professor of psychology at Widener University, believers shoppers overspend for a few reasons: the holiday ritual of sales and Black Friday; an emotional rite of passage; and the snowball effect of spending too much on one gift and then buying other expensive presents.
"Making a budget is boring but it's necessary to understand your financial situation and how much money you can actually afford to spend on gifts, travel and meals without going into debt," says consumer expert Andrea Woroch. "It's easy to fall into the holiday spending trap, but keep consumer expert in mind that the holidays aren't about gifts."
With some creative thinking and some penny pinching, you can have a festive holiday without going broke. Check out these budgeting tips for spending and saving this Christmas.
*Make Travel Plans Early
Traveling to your holiday destination takes patience and money. To get the best travel deal, book flights or trains way ahead of time.
"Track prices using Yapta.com," says Woroch. "This way, if you notice the flight price drop after you book, you can request a credit from the airline."
*Develop a Plan, and Stick With It
"Make a list, create a plan and be armed with information before you shop," says Dr. Steinman. "Do price comparisons between products beforehand, and uncover the best place to buy."
*Start Saving Now!
Susan Doyle of South Carolina set up a special savings account through her credit union.
"I figured out what I want to spend and divided it by the number of weeks to when I think I am going shopping," she says noting she typically shops the week before Christmas. "With every paycheck, I transfer money into that account."
The stashed away money adds up and you probably won't miss it. Then when you cash it out for the holidays, it's like a festive bonus -- for you!
*Curb Your Spending
"Whether it's weekly takeout, weekend spa appointments or too many morning lattes, there is always room in your budget to cut back and boost your holiday savings," says Woroch, who recommends reviewing your spending habits from the past few months to see expenses you can trim.
Don't worry: Cutting expenses now doesn't have to be a forever thing.
Avoid making purchases with credit cards as that could lead to overspending. If you only have cash that'll restrict how much you can actually spend. Set a limit on how much you want to spend and then withdrawal that amount, plus enough to cover taxes or fees, such as warranties.
*Use Your Rewards
While you shouldn't make gift purchases with credit cards, this is a great time to redeem credit card rewards you've already earned. "Use credit card points to offset your holiday spending by turning them into gift cards," says Woroch. "You can give these cards as gifts or use them to pay for gifts at specific stores."
*Don't Forget the Extras
Make sure your budget includes money for covering postage and shipping fees, gift wrap, service fees, taxes and even small things batteries for that new toy you bought for your nephew.
Before you hit the mall, decide who'll be shopping with you. Are they spenders? Savers? Impulse shoppers? "If you are a free spender, bring someone who will rein you in when you are ready to buy," says Dr. Steinman.
Steer clear of the mall! By shopping online, you can focus on the specifics gifts you actually want to buy. You won't be distracted by all the other gadgets and gear that typically bombard you in retail stores.
"Shopping online removes this layer of the shopping experience as shoppers aren't able to touch, feel and experience the product in your hands," says Dr. Steinman, noting online shopping reduces the likelihood of impulse buying.
Prepare for your holiday party by stocking up on paper goods weeks or months before the get-together. Buy holiday wrapping paper and party supplies when they're on sale or use generic ones, like red plates instead of red poinsettia plates.