This holiday season, Americans are expected to spend $830 on Christmas
gifts, according to a recent Gallup poll. That is a
significant increase from the $720 spent last year. And this staggering
figure is just on gifts alone; it does not include holiday entertaining
But you don’t have to overspend–and you shouldn’t. “It is crucial to not overspend during Christmas for the same reason it is every other season of the year. There is no present or ‘thing’ worth your financial peace,” explains personal finance and life coach Debbi King of The ABC’s of Personal Finance. “Any time you overspend–spend money you don’t have– you mortgage your future. And if you are overspending on a credit card, you are going to pay anywhere from 2x to 100x as much for those items, depending on how long it takes you to pay for them. We all want to show people we love them and gifts are a symbol of that. But always remember that this is a season for giving, loving and sharing with family and friends. It is not about how much you can spend.”
First, make a budget–it’s a must. “Even the most financially organized people can lose focus (and lose track) of expenses when the season of giving rolls around,” notes Charles Hoff, member education counselor at Dearborn, Michigan-based DFCU Financial. “Objectively review your financial situation, including savings and all of your expenses through the end of the year. Set a total holiday budget that you can afford without dipping into savings or using your credit card. Make a list of the people for whom you’ll buy gifts and assign a firm budget to each person.”
You could also set aside money just for the holidays. “Open a holiday-specific savings account. Although the holiday season is upon us and seems to begin earlier each year, there’s still time for you to organize your spending approach. Open an account and track against the holiday budget you’ve established. To ensure you’re setting yourself up to accumulate the cash you’ll need to cover gift-related expenses, set up automatic deposits to build your balance toward your budgeted goal,” explains Hoff.
Cut costs by using rewards programs. And if you must use a credit card, use the best one. “Evaluate your current card(s) and determine which is the best option. Some cards offer low introductory rates and many offer purchase rewards that could save you some money on other purchases. Speak with a financial guide to determine which option is best suited for your needs,” suggests Hoff.
Try not to get drawn into the holiday spending hype. “Don’t get caught up in the ‘sales’. Sales are made for consumers to believe they are getting more value for money – although many walk away with a lot of items they don’t particularly need or want,” advises Melanie Djuric, author of “You can.. Be Your Own Stylist.”
Look for ways to save. Save on buying personal gifts by researching not only the gifts but the recipients. “First, you need to know what your recipient wants/likes so the gift adds lots of value to them no matter what the price,” says Djuric. “I also suggest you buy online. You can find so many items online, so much cheaper than in stores. But get moving. You don’t want to be paying last-minute express shipping fees.”
She adds, “You can save on work gifts by buying something small. Don’t go extravagant and try and out-do others. It’s work. They’re colleagues. A box of the recipient’s favorite chocolates, or something small but useful for them to use at work is all you need. Like I said, with personal gifts – make sure it has value to the recipient. Thoughtful presents can be the cheapest but also the nicest of all.”
You can also stay on budget for your holiday entertaining. “A great way to save on entertainment is to have a drop-in instead of a dinner,” suggests King. “With a drop-in, you just need hors d’oeuvres, punch/wine/water, and simple foods and decorations. If you are going to have a dinner, consider a potluck where everyone brings a dish and you provide the main dish. Or let everyone bring their own bottle of wine or drink of choice and you provide the rest. Make it fun and let everyone participate. It makes it easier, more relaxed and more fun. ”Saving during the holidays can start you off for a great financial start for the new year. “This is a great time to start properly managing one’s finances,” James Nichols, head of Retirement and Advice Strategy at Voya Financial, points out. “With the New Year comes a new opportunity for creating a budget and prioritizing debt.”