Avoid Holiday Spending Mistakes
It’s the most wonderful time of the year – and the most expensive too! With so many holiday and year-end costs piling up in November and December, it’s important to avoid some of the most common spending mistakes so you can put your money toward the things that really matter.
Buying too much with credit cards
Financial discipline becomes more important during the holiday spending rush, not less. Credit cards can make this hard – when no cash changes hands, it’s easy for purchases to seem consequence-free until the staggering bill arrives. Don’t charge purchases without thinking carefully about how they fit into your budget. If you’re worried about going over budget, take a set amount of cash or your debit card on your shopping trip and leave the credit cards at home.
Last minute shopping
It’s sanctimonious but true: waiting until mid-December to buy gifts, flights and other seasonal expenditures will cost you money and sanity. If you start early, you’re apt to happen across great gifts at lucky-day prices. This goes for decorations, too – one of the most satisfying tricks is buying next year’s trimmings during this year’s post-holiday sales.
Excessive travel expenses
Although spending the holidays back at home can be a joy, it’s also a huge budget category. Look for ways to trim your travel bill, starting with early ticket purchases. If your vacation time is flexible, investigate whether trains or buses might be cheaper than a flight. If flying home on every holiday is a burden for you, work on setting up a hosting rotation among your loved ones so that everyone gets an occasional chance to stay home.
Excessive and expensive gift buying
Buying gifts for everyone you love and care about can add up quickly. There are lots of ways to spread holiday cheer at a reduced cost such as shopping the sales, using promotional coupons and even making your own gifts. Bake. Craft. Start a secret gift exchange for your coworkers and friends. There are a many ways to express affection and good wishes for others without spending a lot of money. You’ll find that most people understand and appreciate efforts like this—they want to keep their holidays manageable too.
Failing to budget
Even after you’ve trimmed your gift list, there can still be an intimidating number of things to buy. A clear budget makes holiday prep more manageable and affordable. Make a list of everything you’ll need for the holidays, and then (as above) trim as many items as you can. Don’t forget gift-wrap (newspaper tied with colorful ribbon is a cute Do It Yourself budget option), hostess gifts, food and drink, decorations or charitable donations. Once you’ve got your list, note how much you’re willing to spend on each item. Take the list with you every time you shop, and stick to it.
Falling for common advertising tricks
As you shop, watch out for advertising tricks that will leave you with less money and more worthless stuff. Don’t fall for holiday ads that tug at emotions like stress and nostalgia – perfect presents are nice, but will they really change your relationships? Will that expensive wine for your party really make your friends happier? Also beware of ads that hinge on urgency. Sales can be useful, but they’re a bad reason to buy something that you’d never have wanted if you hadn’t seen the “Sale!” sign in the store. Focus on what’s really important to you and filter out the noise.
Slacking off on normal financial upkeep
With everything that goes on between Thanksgiving and New Year’s, it’s very easy to fall behind on normal, week-to-week financial responsibilities. Make sure you continue to pay your bills on time, keep a record of your charitable contributions and monitor your incidental spending. Consider it a holiday gift to yourself.
Don’t let financial stress take the joy out of a season meant to celebrate all the good things in your life. By planning well and keeping your priorities in sight, you’ll keep yourself on track for the happiest holidays yet.
Source: Guest Column by NerdWallet.com, exclusive to Farmington Bank