Holiday Spending: 9 Ways to Manage Your Finances & Avoid Post-Holiday Blues by 30Seconds Mom
The holidays are upon us, bringing all those personal and family images and sensations we cherish. But for many of us, there are a few not-so-joyous holiday sights (overflowing boxes and bags from our purchases) and sounds (email notifications of our latest orders and purchases online and the ca-ching of retail cash registers marking our escalating debt). These negatives can easily outweigh all that we love about the holiday season. "Overall, the 2008 financial crisis and recession brought about a renewed dedication to saving," says Eric Tyson, author of "Personal Finance in Your 20s & 30s For Dummies." "It's very important that you not let your holiday spending zap all of the saving progress you made during the year. What if you could have a wonderful, memorable holiday and avoid the financial hangover afterwards? Tyson provides great tips on how to keep your holiday spending in check:
- Find an alternative to gift-giving during the holidays. Many people feel they have to give gifts during the holidays, either because it's a family tradition or because they know their friends and relatives have gotten gifts for them. There are plenty of great ways to trade in this tradition for another one that is even more meaningful, and chances are your family and friends will be happy to save gift-buying dough as well. "Instead of exchanging gifts, your family members might want to pool their money and spend it on a holiday outing," says Tyson.
- If you must buy gifts, cut your expenses elsewhere as necessary. Perhaps you'd rather dine out or go to the movies less, or maybe you can forego that new pair of shoes you've been wanting for yourself in order to afford gifts for the grandparents. "It doesn't matter where you make cuts, just that you make them," says Tyson.
- Set a budget and keep tabs on what you are spending. While you're doing your holiday shopping, your new best friends should be your bank account and credit card records. It's easy to get into a spending rhythm when shopping for yourself or others, and that's why you need to keep track of every purchase you make and make sure you don't go over your budget. "When you start to add up everything you're spending, you may be shocked at what all those expenses from this store and that store add up to be," says Tyson. "And don't forget about all those 'necessary' holiday extras. Most people don't budget their shopping and don't realize that by the time you buy all the presents, plus wrapping paper, cards, decorations, etc., it's added up to a ridiculous amount."
- Plan what you are going to buy, and don't get any extras! Particularly during the holidays, companies pull out their most appealing packaging in hopes of snagging the eyes of shoppers. That's why along with your budget, you're going to want to take an exact list of what you want to buy for your gift recipients. Don't go shopping for someone's gift until you know exactly what you are going to buy. "It's very easy to go in with no plan, see something you like, and get it simply because you have no idea what else to get for a hard-to-buy-for relative despite the gift's significant price tag," says Tyson.
- Watch out for deals that seem too good to be true. Retailers and websites run all sorts of specials to induce consumers to buy now, and the holidays offer these companies easy prey in the form of deal-seeking, cash-strapped consumers. For example, furniture stores frequently offer that if you buy now, you don't have to pay a thing for a year, and you might even get free delivery. This sort of "push" marketing can make it harder for you to say no.
- Leave the plastic at home. Many of us can explain away spending so much on gifts because we simply charge everything and reason that we can pay it off gradually after the holidays. This is a great way to create a never-ending cycle of consumer debt for yourself. It only creates unnecessary financial stress for you after the holidays. "Use your budget to figure out how you can purchase the gifts you want to purchase without putting them on your credit card," says Tyson. "If you are so cash-strapped that you think it will be difficult to avoid charging gifts, then you may want to sit down with other friends and family and propose a limit on how much gifts can cost this year, or propose no adult gift exchanges at all."
- Invest in your kids' financial futures. It may not seem as exciting to your kids as a new iPod, but a contribution to their financial well-being will be appreciated long after such expensive "toys" are obsolete. "Have the grandparents contribute to a college tuition fund or savings account rather than buy them more stuff they don't need," suggests Tyson.
- Give the gift of time to your kids. Often, parents buy gifts for their kids with the best of intentions. Either you don't want to deprive them of the toys and gadgets all of their friends have, or you want to give them the things you didn't have as a kid. "Both of these tendencies are perfectly understandable, but I've found that parents who buy too much for their kids often have difficulty changing the habit," says Tyson. "The holiday season offers great opportunities for you to show your kids how much you love and care for them."
- Remember that meaningful gifts don't necessarily have a big price tag. "Sure, it might be nice to give your mom a brand new TV, but there are other things out there that will be even more meaningful and enjoyable for her," says Tyson. "If you are looking to give a gift that truly means something and that will keep its value for years to come, you are better off looking for non-material gifts to give than for something your gift recipients could get themselves at the local big box store."
"Money can easily become the focus of the holidays when it should be the last thing you are thinking about," says Tyson. "By keeping your spending under control, you can have a great holiday and avoid the sick feeling in the pit of your stomach that occurs when you start getting those January credit card bills. If you prepare properly, you can achieve a happy balance of spending and saving during the holiday season. That's a great gift in and of itself, for both you and the people you love."
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