Even people who are usually cautious with their spending tend to spend more during the holiday season. It's a time of parties, big holiday meals, presents, decorations, and travel to visit friends and family. It's easy to get caught up in the holiday frenzy and lose sight of your budget.
If you plan ahead and follow a few simple strategies, however, you can still enjoy the holidays and avoid a stressful, costly post-holiday debt deluge.
- Start with a budget. Take a careful look at your household budget, then figure out what you can reasonably spend without building debt. List all your holiday expenses, including:
- the amount you will spend for presents for each person
- the cost of special food for celebrations and parties at school or work
- decorations, cards and postage, wrapping paper
- travel expenses including gas, airfare, car rental, and hotel stays
- charitable donations you usually make during the holidays
- Build a holiday fund. Cut down on some non-essential expenses and put the cash you save away to help pay for the things you'll buy during the holidays. If you usually buy lunch at work, rent a few movies each week, and have pizza on the weekends, redirect that money into your holiday savings. If it won't strain your budget, have some of each paycheck deducted and direct deposited into a savings account.
- Do some research before you shop. Check websites and sale circulars to find the best prices on gifts, food, and more before you head out to the mall or grocery store. Some sites offer free shipping and don't have to charge sales tax, so you might find a better deal on the web than locally.
- Shop early and stick to your list. While you may find a few great deals on Black Friday and Cyber Monday, you're just as likely to find some bargains if you start shopping now. You're also less likely to be caught up in the pressure to buy that grows as the holidays get closer. It's easier to stick to your budget if you have a detailed list of what you need to buy. Include alternative gifts in the same price range in case you can't find what you had in mind. If you plan to travel, book flights, hotels, car rentals, and train tickets sooner rather than later to get a better deal.
- Consider homemade gifts. If you have the time, making rather than buying gifts can save you a considerable amount of money. But don't assume homemade is always less expensive. Price all the supplies you will need to make sure they won't break the bank.
- Choose cash over credit. Whenever possible, use cash or your debit card to pay for holiday expenses. You'll have less stress in January if you're not hit with huge credit cards bills.
Remember to plan ahead and come January, you may be able avoid debt that could take months to pay off.