7 tips to manage your holiday spending

November 28th, 2011 Mary Schmidt

The holiday shopping season doesn’t have to leave a permanent mark on your bank account. Kick off the holiday season with some of our tips on how to effectively manage your money while spreading holiday cheer.

1. Estimate holiday expenses and set a budget.

Make a list of everyone you have to purchase gifts for, then figure out how much you can afford to spend on them. Set the dollar amount based on what you can afford this holiday season considering your current savings, income and other expenses. But don’t stop there. If you plan to have a holiday gathering, add up the costs of food and beverages. And if you’re traveling, those costs must be included, too.

2. Start early.

Don’t wait until the last minute to make your purchases. Starting early will give you time to shop around and ensure you are getting the best deal on your purchases. It will also prevent you from going into a last-minute spending spree that could force you to spend more.

3. Make a list, and then shop around.

Write down the names of the people you plan to buy gifts for, and what you plan on buying. Then, take time to do some research on the best deals before you hit the stores. Remember that many stores now honor lower prices from other stores. Also, don’t forget to save some of your budget for other expenses like wrapping paper, cards, food and postage.

4. Use credit wisely.

If you’re using your credit card for your holiday shopping, be cautious. Don’t spend more than you can afford. Your credit card balance shouldn’t be a complete surprise when you open your statement in January. Try to use debit cards, and if that’s not possible, use the credit card with the lowest interest rate.

5. Take a “hands-on” approach.

If you can’t afford to buy gifts for everyone on your list, make homemade gifts instead. Bake some holiday goodies and wrap them in cellophane with a holiday bow. Knit a scarf. Make a festive holiday wreath. Handmade gifts are a special way to say “Happy Holidays” without overspending.

6. Use cash instead of plastic.

Instead of using debit or credit cards, withdraw your budgeted holiday spending money from your account and use that to purchase gifts. This doesn’t only serve as a visual reminder, but it also prevents you from spending more than you budgeted. Plus, when you have a wallet full of bills and you actually see those bills diminish, you realize what you’re spending.

7. Save your receipts.

Keep track of your expenses and add them up on a regular basis to be sure you’re sticking to your budget. If you’re getting close to your spending limit, reevaluate your list and bake more cookies! The added benefit of this tactic is that it allows you track your overall holiday spending when you’re done. This will help you budget for next year’s shopping bonanza well in advance.

Holding true to your budget during the busy holiday season is an excellent jumpstart to healthy year-long budgeting habits.

Mary Schmidt

About the author

Mary Schmidt is manager of a MidWestOne’s location. She specializes, among other things, in consumer loans, auto loans, home equity loans, and real estate lending.

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