It’s that time of year again – malls all over the country are busting at the seams and wish lists from children and family members are slowly starting to make an appearance.
If you dread this time of year for what it does to your bank account, you’re not alone.
Holiday spending can easily get out of control. In 2011, holiday spending in the United States reached $471.5 billion, according to the National Retail Federation. That represented a year-over-year unadjusted increase of 4.1 percent. What’s even more telling is that the holiday season can account for anywhere from 20-40 percent of a retailer’s annual sales!
If you want to cut down your holiday spending this year, these tricks will help.
Establish a holiday budget.
Before you start spending money on holiday gifts, take a look at your finances and establish a holiday spending budget. Put together a simple list of who you want to purchase gifts for, and determine how much you can afford per gift/per person. Next, go through your list again, and jot down gift ideas that fall within the budget range that you’ve set for each person.
Pay with cash.
To avoid overspending, make a commitment to pay with cash as opposed to credit cards. This will force you to stay within your holiday budget and also help you prevent impulse buys.
Use wish lists as a teaching tool.
Teach your children about the importance of making tough financial decisions by asking them to select the top three to five items on their wish list they want most. An alternative to this approach would be to give them a dollar amount they cannot exceed.
This will help them understand the value of money and avoid the expectation that they will receive all items on their list.
Move beyond money.
Consider alternatives to purchasing holiday gifts. Plan and organize a family outing. Cook an elaborate meal. Spend some time with parents or grandparents to teach them how to use an iPad or smart phone. There are many ways you can spread holiday cheer without having to spend money.
Don’t shop for yourself.
Resist the urge to shop for yourself while you’re at the mall. Sales and special offers can often make it tempting to adopt a “one for you, one for me” mentality. This can lead to double the expenditures. Stay on track, by sticking to a shopping list and not deviating from your budget.
While Black Friday marks the official start to the holiday shopping season, that doesn’t mean it has to be yours. Start shopping for gifts in the fall. This will not only give you more time to shop, but will also stretch spending over a longer period of time, which can help reduce the overall impact on your finances.