How to shop smarter to avoid overspending during the holidays

Life Lessons

How to shop smarter to avoid overspending during the holidays

Shopping during the winter holidays makes up about 20% of annual retail sales each year. According to the National Retail Federation, sales in November and December are expected to increase by about 4% over 2018. That means 2019 holiday spending could top $730 billion and be the highest on record.

While it’s important to enjoy the holidays, everyone needs to draw the line between having a good time and overindulging. To avoid overspending during the holidays, here are seven tips for shopping smarter.

  1. Make a shopping plan.

Start making financial plans for holiday shopping as early as possible. Decide how much you can afford for everything you’d like to do. For instance, you might want to give gifts, decorate, throw a party, send cards, or travel.

If you still haven’t paid off last year’s holiday expenses, you overspent—so be sure not to repeat that mistake this year. Consider opening a separate savings account just for the holidays. Your employer can send a portion of your paychecks to the account, so you’ll have plenty to spend by the end of the year.

  1. Create a gifting budget.

Once you decide how much you can afford to spend on holiday gifts, make a list of people to buy for, by importance. For instance, you might rank the gifts for close family members as higher priorities than for co-workers.

Then assign a dollar amount for each person. Don’t forget to include the costs of any sales tax, shipping, and gift wrapping. It’s essential to know the maximum amount you can spend on each person before you start shopping. That’s because there are a lot of distractions and temptations out there.

If you don’t have enough money to cover each person on your list, you must shorten your list or reduce the amount you spend on certain people.

  1. Be creative.

Though the holidays are steeped with tradition in some families, there’s nothing wrong with being creative. Try out different gift-giving ideas this year to stay festive on a budget.

  • Agree to buy gifts only for children in the group.
  • Give your time with certificates for services you can do, such as babysitting, cooking, gardening, organizing, or giving help with computers.
  • Have a secret Santa exchange where each person buys a gift for a randomly assigned person.
  • Give donations to charity instead of giving gifts.
  • Spend money on traveling to see loved ones or taking a vacation together that doesn’t include gifts.
  • Redeem any credit card rewards you may have accrued for holiday gifts or gift cards.

Doing something different can make a holiday more memorable. Make a goal to spend quality time with family and friends that won’t destroy your budget or put you in debt.

  1. Shop and compare gift costs online.

While shopping online may not be as much fun as strolling through a mall or downtown that’s lit up for the holidays, it can be more affordable. The Internet is an easy way to find gifts you have in mind at the lowest prices.

Plus, shopping from home saves time, hassle, and may cut other expenses, such as gas or eating out. You can even get rewards if you start your online shopping at free cashback sites like Rakuten or Top Cash Back.

Many online retailers offer free shipping but may require a minimum purchase to qualify. So, be strategic and buy multiple gifts from the same retailer to save on shipping, when possible.

  1. Say “no” to retail credit cards.

If you do venture out into local stores for holiday shopping, remember that many clerks are trained to offer you a retail credit card at checkout. Getting a discount on your purchase for signing up may sound great, but these cards come with several downsides.

One is that applying for a retail card results in a hard inquiry on your credit report, which can temporarily lower your credit score. Also, these cards typically come with high-interest rates that may wipe out the money you hoped to save by getting one in the first place.

  1. Get gift wrapping for free.

The cost of gift boxes, wrapping paper, tape, and ribbons can add up. Take advantage of free or discounted wrapping at local or online stores. You can also save by turning newspapers, magazines, or paper bags into fun, recycled gift-wrapping paper.

  1. Resist self-gifting.

If you tend to buy yourself a few gifts while holiday shopping, stay away from your favorite stores. For instance, if you’re a gadget junkie, avoid going into any electronics stores. Also, when you’re shopping online, stay focused and don’t get sidetracked by sale items.

When you get tempted to buy for yourself, remember that your family or friends might be wondering what to give you. Try dropping a hint instead of self-gifting!

Giving should come from the heart. With a little planning and foresight, you can enjoy the holidays with less expense and stress.

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