Budgeting Tips for the Holidays
While the holidays are known as the most wonderful time of the year, holiday expenses can be a real grinch. From finding the best presents to booking a family getaway, many shoppers will overspend this holiday season.
A recent survey from CreditCards.com revealed that 42% of all U.S. adults are willing to take on debt for holiday spending, as well as 61% of people who already have a card balance. With sales already in full swing, Dr. Bob Castaneda, program director for Walden University’s BS and MS in Accounting and MS in Finance programs, recommends financial strategies that can help relieve the pressures of overspending during the holidays.
“With Black Friday and Cyber Monday around the corner, millions of Americans will overspend on their holiday shopping for family and friends,” says Dr. Castaneda. “Being proactive with financial strategies can help alleviate some of that stress.”
Dr. Castaneda offers the following tips on how holiday shoppers can stick to their budget while searching for the best deals.
- Target your spending. Establishing your holiday budget early in the year is key to controlling your spending during the holiday season. In addition to presents, your budget should also include holiday meals, decorations and travel expenses. This strategy ensures that you only spend what you have, while allowing you to take advantage of holiday sales as they arise.
- Buy before the holiday season. Instead of waiting until the holiday season, utilize discounts throughout the year. Most publicly traded retailers will have sales events right before their quarter end in March, June and September, with discounts as high as 30 to 40%.
- Utilize layaways. For those shopping at major retailers, this payment option is a great way to secure large purchases. After making a down payment, retailers will reserve your layaway items until you pay off the purchase.
- Use 0% APR credit cards. If you need a credit card to make a holiday purchase that can’t be passed up, use a credit card with 0% interest. Many credit cards offer 0% interest rates for an introductory period, typically for the first 30 days, 60 days or 12 months. Just be sure to pay off the credit card balance before the interest rate kicks in and make payments on time.
- Negotiate gifting. It’s common for larger families to agree on only buying gifts for the children. To alleviate the financial pressure of buying a gift for everyone, consider a gift exchange – like a Secret Santa – with your close friends or family.
- Shop after Christmas. One of the best times to buy Christmas wrapping paper, home decorations and other items is right after the holidays, saving you money for next season. Shoppers should take advantage of post-holiday discounts, especially when buying gifts for subsequent holidays or upcoming birthdays.
Without a financial plan, holiday spending pressures can lead to buyer’s remorse. To ensure you’re not still paying off this year’s holiday expenses in 2020, set realistic goals for your holiday budget, maximize discounts throughout the year and find creative, feasible ways to celebrate the holidays with your loved ones.