The holidays are upon us, and in addition to festive time spent with family and friends, for most of us it means a lot of money spent on holiday gifts and other once-a-year expenses. But, warns Leslie Greenman, don't let this year's holiday spending ruin all of the saving you've done throughout the year. She offers valuable tips on how to keep your holiday spending in check.
St. Louis-Holiday shopping for 2011 is about to kick into full swing. And though many Americans are saving more throughout the year, the holidays offer that all-too-tempting opportunity to let loose and splurge a little. In fact, if you aren't careful, in November and December you can blow all the good saving intentions you held firm to during the rest of the year. Last year, Consumer Reports found that as of October of 2010 14 million Americans were still paying off credit card charges incurred during the 2009 holiday season. This year, reports Gallup, Americans plan to spend an average of $764 on Christmas.
And while that number is down from pre-recession amounts, it still represents a significant chunk of change for many American families. Leslie Greenman says that in order to curb our bad spending habits during the holidays, we must first understand why we let ourselves splurge in the first place.
"We spend a lot during the holidays because we love giving to our friends and family," says Greenman, a financial advisor, "Watching someone you love open that perfect gift can be really gratifying. The holidays also give us a guilt-free pass to shop 'til we drop. You don't have to feel bad about spending because you're not buying things for yourself, or at least you shouldn't be! And you can justify it by telling yourself, 'Well, I have to get gifts for everyone or they'll be disappointed in me!'"
But, Greenman notes, this psychology of gift giving isn't good for your financial health.
"While it's nice to give someone something they want, that good feeling will quickly fade when you see how much your holiday spending affected your finances," says Greenman. "The good news is that with careful planning you can give everyone on your list a special holiday without having to pay for it for months and months to come."
Read on for Greenman's tips on how to keep your spending and your sanity in check this holiday season:
Get real with yourself about your financials. Before you even make your gift list, you need to have a heart-to-heart with yourself about your financials. "Look at how much you can realistically spend," advises Greenman. "Then decide whether or not you really need to spend that amount. If it has you feeling anxious then absolutely create a budget that has you spending less. Think about your long-term financial plans. Don't allow your holiday spending to negatively affect your bigger plans. When you know what your financial picture really looks like, instead of thinking about it as a black hole, you'll be more inclined to control your spending."
Don't fall back on old holiday spending habits. When you're making your budget, it's important to remember that spending during the holidays does not stop with gifts. We allow ourselves a little more leeway when it comes to other discretionary spending as well.
"Holiday incidentals include additional food spending, entertainment costs, clothes buying, wrapping paper, and on and on," says Greenman. "All of these costs add up, big time, and they often get overlooked during the holidays. They can also be slightly easier to eliminate or reduce than the money you're spending on gifts. For example, it isn't necessary to buy a brand new dress for your office party. You could borrow a dress from someone or add an accessory or a great pair of shoes to a dress you already own. In fact, this is actually a great reason to organize your closet. When you can easily see what you have, you can quickly put together a great holiday outfit without spending a dime. As for food costs, if you're having a holiday party, make it potluck so you don't carry the food cost burden all by yourself."
Don't shop when you've got the holiday blues. This time of year can bring a lot of joy, but the hectic nature of the season can also be overwhelming. "Avoid shopping when you're having a down day," advises Greenman. "Studies have shown that we are willing to spend more when we are sad. So when you're suffering from the holiday blues, curl up and watch a holiday movie or go do something fun with your kids instead. Save the shopping for a better mood."
Remember, 'tis the season for relationships. It's perfectly natural to want to give back to those who give to you, but it's quite possible that your friends and family will appreciate an end to spending this holiday season just as much as you. Suggest to those on your gift list that you all spend valuable time with one another rather than purchasing gifts this year. For example, suggest to your best friend an afternoon together meeting for coffee and going to a movie. Or treat your parents to a home-cooked meal and some Christmas carols performed by their grandkids.
"I think you'll find that people will like the idea of making the holiday about relationships rather than shopping and spending," says Greenman. "And this plan will start showing dividends early on. While you and your friends and family are enjoying quality time together, you'll also be avoiding the stressful hustle and bustle that all of the holiday shoppers are suffering through. You can also take this a step further and make it even more gratifying for everyone involved. Suggest to your loved ones that the time you spend together be used to volunteer for a local charity-a great way to enjoy the true spirit of the season!"
Establish an "Operation Holiday" plan. If there is no avoiding holiday shopping for you, once you know what your budget is start mapping out your shopping plan. Make the gift list and then think about where you'll need to go to purchase each present. "Keep your key goals in mind," advises Greenman. "For example, are you trying to keep each gift under X amount of dollars? Do you want to be finished by a certain time? Avoid a certain shopping area? Again, if you stick perfectly to your plan, I think it's okay to reward yourself. Just don't go overboard. For example, if I meet my goal of buying my gifts and staying on budget, I'll treat myself to a pedicure."
Finish your shopping early in the season. Though getting out for those late night/early morning hours on Black Friday might not be your thing, it is best to start your holiday shopping as many shopping days before Christmas as you can.
"As the holiday gets closer and you realize you haven't even made a dent in your list, you'll start to get desperate," explains Greenman. "And when you're desperate, you won't have as many misgivings about going over budget in order to get your shopping done. You'll also have less time to finish your shopping so you'll think you have to get whatever is available. 'Shop early and save' should be your new motto. Another positive to getting all your shopping out of the way early is that it gives you more time to kick back and enjoy all of the fun festivities leading up to the holidays."
Set a holiday shopping curfew. You don't have to go tearing through stores pushing innocent shoppers from your path, but setting a time limit on your shopping will help you stay on budget.
"Keeping in mind that you need to be done by your self-imposed shopping curfew will prevent you from lingering in sections of a store that may have caught your eye but don't contain any items from your list," notes Greenman. "It will also help prevent you from spending time shopping for yourself. And because holiday shopping should be fun, take a moment to reward yourself if you do finish by your deadline. Buy yourself a cup of hot chocolate, or better yet, make some for yourself and the kids when you get home. Remember, the less time you spend shopping, the more time you'll have to spend with friends and family."
Remember, it's the thought that counts. You might find the perfect gift for someone but then reject it because you don't think the price is significant enough to be an adequate gift.
"The reality is that a gift with a lot of thought behind it or shared meaning for you and the person you're buying for can have a lot more significance than a more expensive gift," says Greenman. "For example, a special photo of you and a friend in a frame with a special note about how much you enjoyed the time you spent together is a great gift. Or have your kids write down the 10 things they love about their grandparents and include the list in a photo album of the kids. These are all gifts that involve more thought and meaning than just going to the store and buying a gift. And the people receiving them will truly appreciate it."
Make a list, check it twice, and bring cash! How many times have you walked into a store and immediately found the perfect gift for a friend? Sure, you hadn't planned on spending that much, but she would love it, so why not? You can just put it on your credit card, right? "Wrong!" says Greenman. "If you use your credit card, you'll probably end up buying that gift for your friend two or three times over in interest payments. Do not stray from your list. If you do stray, the cost of the non-list item needs to be the same as the one you had already budgeted. Bring only cash with you when you're shopping so you can stay within your budget."
Save merrily by trading in your rewards points for gifts or gift cards. You should always, always use your credit cards wisely. Never make purchases on your credit card unless you can pay them off at the end of the month. And during the holidays avoid whipping them out to pay for gifts. But one positive role credit cards can have during the holidays is rewards points.
"A few years ago, I bought my sister a chair she wanted from Pottery Barn using rewards points," says Greenman. "I redeemed some of my points for a Pottery Barn gift card and then used it to buy her the chair. In fact, I save up all my rewards points throughout the year and use them in December for gifts. Another example: teacher gifts. I always get my kids' teachers Barnes Noble gift cards using redeemed points."
Point, click, and save. The benefits of online shopping are obvious. You don't have to battle holiday traffic, it is practically hassle-free, and it's easier to compare prices. "The prices are also almost always better online," says Greenman. "You have a greater selection, and usually free shipping is offered around the holidays. And when you use specific search terms, you can avoid being distracted by all of the other items you might want to look at or be tempted to buy if you were shopping in the store."
Don't shop for yourself. According to Lab42, last year the average holiday shopper spent $107.50 on themselves. When you're making it okay for yourself to do a lot of spending, it can be difficult not to stray off your list and buy a couple of things for yourself.
"We have all done it," says Greenman. "You see something you like and think, Wow, that is so cute. I will buy one for so and so and one for me. You can resist this urge by implementing some of the tips we've already covered, but also by keeping in mind that you'll be receiving gifts at Christmas. They'll be all the more special if you haven't been buying yourself new things all along. Also, keep in mind that you'll be finding the best deals after Christmas. So wait until you can get more bang for your buck."
Don't shop with a holiday budget saboteur. If you prefer doing your shopping with someone else in tow, be sure to choose someone who won't encourage you to go off budget.
"I can whiz in and out of a mall in 30 minutes if I'm with my son who hates shopping," says Greenman. "Or bring a girlfriend and be there half a day. Carefully consider who you're shopping with. Will the person encourage unexpected buying or splurging? If so, you might want to politely decline their invitation. You might also consider who's going to keep you on track. You might bring along one of your kids because you know you want to show them how to be fiscally responsible and use the opportunity to show them how to stick to a budget."
Have a Secret Santa-style gift exchange. Depending on the size of your family, buying a gift for each family member can be daunting, especially when you see some of them only once a year!
"There are exceptions, but I think by and large once you reach a certain age-specifically the age where you feel obligated to buy gifts for everyone-the reality of gift giving and receiving sets in," says Greenman. "My point is that most of the adults in your family will probably be grateful not to have to buy a gift for everyone. Instead, suggest that your family do a gift exchange. At Thanksgiving, have everyone pick a name out of a hat. Then, you buy only for that person. It is a great way to help everyone cut down on unneeded spending. And if you're just shopping for one, it gives you a lot more time to think about what would make the best gift."
Don't be afraid to regift. Take an inventory of regifting possibilities. Are there any gift cards you've never used? Any clothes hanging in your closet with the tags still on them? Any gifts you've received in years past that you've never taken out of the box? If so you might want to consider regifting them.
"Many people avoid regifting because they think it violates some rule of etiquette," says Greenman. "But when done properly, it can help you find a home for items that you're never going to use. Sure, there is a line that has to be drawn. If your grandmother got you a sweater that you hate, but she expects to see you wearing, then that's probably not an item that you should regift. But let's say a former colleague got you a scarf as part of a Secret Santa exchange at work last year. It's a perfectly nice scarf, but it's a color that just doesn't look good on you. That's a great item to regift. You'll get it out of your house, and someone else will love having it."
Make like Santa's elves and DIY. Getting crafty during the holidays is fun and can save you a lot of money on gifts. There are any number of options depending on your level of craftiness. "Costco has cute jars filled with cookie dough ingredients," says Greenman. "We could all do that at home! Bake cookies and place them in a holiday tin for your kids' teachers. Frame your kids' artwork for their grandparents. The possibilities are truly endless and truly cost-effective!"
If you're super savvy, plan (way) ahead. As we've touched on above, there are always great deals after Christmas. That means if you can get over your holiday hangover fast enough, you can get a jump-start on buying gifts for next year while also saving a bundle. "My bargain shopper friend buys many of her gifts for the next year's Christmas during the current year's after-holiday sales," says Greenman. "She is always finished shopping by October. If immediately after Christmas is too soon for you to think about the next year, take advantage of other sales throughout the year. For example, there are almost always great sales at Easter, Memorial Day, the Fourth of July, and Labor Day."
"We naturally want to give during the holidays," says Greenman. "But what's important to remember is that you can give a lot without spending a lot. Don't put a price tag on your holidays. Stick to your budget and then be generous with your time and spirit. Once the holidays are over, you'll be happy you didn't blow your savings, and you and your family and friends will be fulfilled by the time you all spent together."
About the Author:
When Leslie Greenman's husband unexpectedly passed on at age 35, she suddenly became a single mother of two boys (ages two and four). Leslie learned how quickly life can change. She went into the financial industry to empower women with the knowledge and confidence to take action and be prepared. Through her tough experiences of becoming suddenly single, she realized how easily women can be misinformed and taken advantage of. Dating Our Money offers women the important information they need to confidently make smart choices with money and men.
Leslie is currently a financial advisor, author, and public speaker. She loves to talk to women and girls about managing money and making wise choices but can adapt a speech to meet the needs of any audience. She encourages people to remember that every decision counts! Buying soda at a restaurant could prevent you from saving thousands of dollars over a lifetime.