How to prevent a holiday spending hangover

Benefiting You

How to prevent a holiday spending hangover

The holidays are upon us, which usually means one thing: buying presents for friends and family. It’s a fun time and something that comes around only once a year. But if you’re using a credit card to make those purchases, it can often result in a hangover like feeling.

The hangover? Getting your credit card bill in January. MagnifyMoney reports that Americans, on average, added $1,054 in credit card debt during the 2017 holiday shopping season. Without a plan, that kind of debt can take months or longer to pay off.

Giving gifts is fun, but it’s hard to justify adding significant debt to make those purchases possible. If you’re worried about how to finance holiday shopping this year, here’s how to prevent a spending hangover and head into January guilt free.

 Know your number

The best way to avoid overspending this holiday season is to have a budget. Budgeting lets you plan where to spend your money throughout the year. Why not use it as a tool to plan your holiday spending?

“The best way to avoid overspending at the store or while buying online is advance planning. Start with a budget. This piece has to come first,” says Natasha Knox, CFP® and founder of Pax Planning.

As you start your shopping budget, list everyone you want to buy for and what you have in mind for their gift. Then, have a total number in mind you want to spend. A budget guides your spending and gives you a figure to measure each purchase against so you don’t overspend. Knox adds to make sure you don’t forget smaller expenses, such as postage or shipping, so you don’t accidentally overspend.

 Avoid retailers’ tricks to get you to spend more

Retailers, whether physical or online, love to trick us into spending our money. This is especially the case during the holidays. You get caught up in the festivities, not realizing you’re doing exactly what retailers want you to do.

A budget does help in these situations, but you also want to be aware of these temptations. Below are just a few of the tricks retailers like to use to get us to spend more:

  • Changing the location of products
  • Free shipping offers
  • Letting you check out with one click
  • Reminder ads
  • Free gift cards if you spend a certain amount

While all of these are legitimate offers, they can cause you to spend more than you budgeted. Retailers are smart. Don’t make their jobs easier by giving into their tricks to spend more than you need.

 Give a gift from the heart

Cutting back on spending during the holidays is never fun. You want to give a gift that means something. Buying that gift is easy because it requires less effort than physically making a gift. This also makes it easy to justify spending more to get the “right” gift the recipient will love.

Unfortunately, these gifts are often less personal and may be easily forgotten. Do that with a few gifts, and it’s easy to blow your budget. Making a personal gift is a great way to give something heartfelt without overspending.

“The best way to trim your holiday gift budget is by making gifts yourself,” Knox says. “This has many bonus effects. People love homemade and handmade gifts. In an age where we’re overrun with impersonal gifts and gift cards, which are even less personal, a gift made with love is one that’ll stand out from the crowd.”

Here are a few ideas of gifts you can make:

  • Hot chocolate
  • Favorite baked goods
  • Flavored salt or sugar
  • Mason jar creations like candles or potpourri
  • Something cross-stiched

The possibilities are endless, and the result is often more memorable than a store-bought gift.

 Honesty is the best policy

Tightening the spending reigns is often difficult during the holidays. You may feel your family or friends expect you to spend a certain amount. You may also feel guilty because you’re unable to purchase the gifts you want to buy. It’s best to get in front of this as soon as you can.

“The best way to manage the expectations of family members is to do it as soon as possible — before people start making plans based on how things have always been done,” Knox says.

If you and your family or friends have always done one thing, simply be honest with them. Explain your situation and provide some alternative solutions. Consider having a white elephant exchange or potluck during the holidays. This lets you spend time together without risking overspending. It’s likely your loved ones will understand and even provide encouragement to help you get your finances back on track.

The holidays are a fun time for many, but they’re not worth accruing or increasing debt to give gifts. With a few simple actions, you can have a fun holiday season without the associated hangover come January.

 

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