Unsurprisingly, the month of December accounts for nearly 30 percent of total annual sales for some retailers (i.e., it’s the costliest season of the year for the rest of us)! According to experts, Americans spend nine times the amount of money retail shopping during the holiday season than any other season of the year. OUCH. And when January comes along, the negative effects of spending set in: higher than expected credit card statements, tighter finances than imagined, increased stress and regret over the amount of money spent. In order to avoid overspending during the holidays, we’ve got some simple ideas for you to keep things in check. Good luck!
Set a Budget
First things first, decide how much money you want to spend. Think through everything involved in your holiday shopping, from gifts and travel to food and decorations. Perhaps you’ll be entertaining, too? Dividing your budget into different categories will help you figure out how much you can spend on each, and if the numbers aren’t lining up, what changes and/or sacrifices will you need to make?
Be Aware of Retail Tricks
If merely creating a budget was the only thing we needed to do, we’d be all set! Unfortunately, that’s not all we need to do. Even with firm budgets, there’s a tendency to overspend. One reason this happens is because retail stores are shockingly good at getting us to spend money (think loyalty cards, retail credit, decoy pricing, incentives to return to the store, refunds and constant sales). Be on the look-out for them—especially during the holiday season.
Cut Down on Convenience Costs
Some of the most hidden costs of the holiday season are for “conveniences.” The holiday season throws us out of our usual schedule by adding extra responsibilities and activities. As a result, the price we are willing to pay for convenience begins to rise (sometimes, it is just easier to grab food while you’re out if running late for an appointment or getting pizza delivered for the kids if we need to attend the office holiday party). All that extra shopping can lead to other unnecessary purchases: coffee on the go, snacks, etc. These expenses seem small, but over the course of a month they can add up quickly.
Establish Expectations Early
If you decide to cut down on the number of Christmas gifts you will be giving this season, it is important to establish those expectations early. For example, our kids at Christmas receive three gifts from us: one thing they want, one thing they need, and one experience to share with the family. But when we decided to make the changes to our gift-giving habits, we took time to inform them about it. Same goes for extended family.
Track Spending
If possible, track your spending on a daily basis. This is a good thing to do in general, but absolutely essential to avoid overspending during the holiday season. If you have set your budget ahead of time, it is important to keep at it. No need to be fancy about it, either – an ol’ fashioned pen and paper will do! Then, compare it regularly with the budget you created.