Between last minute trips to the mall, impulsive online shopping sessions and spontaneous family gatherings, it can feel like you're spending left, right and centre during the holidays. The result can feel like a financial hangover when that credit card bill comes in January. Instead, let's take an intentional and more mindful approach to avoid overspending. By tracking your holiday purchases, you'll be less likely to overspend and more likely to stay on budget.
Here Are 3 Tips for Controlling Your Holiday Spending
1. Plan Your Holiday Gifting
Whether you're shopping for friends, family members, your kid's teacher, or for a gift exchange at work, make a list (and check it twice).
Start by taking a look at your calendar or social media events pages, and see how many holiday gatherings or parties you'll be attending over the season. Attending a dinner at someone's home? Do you plan on purchasing a gift for the host? Are your kids having a gift exchange at school? Make sure to note your gifting commitments for the season.
Then, write out the names of every person you'll be purchasing a holiday gift for this year and set a specific dollar value for each person's gift. This helps ensure that your spending is intentional, rather than impulsive.
2. Create Separate Budget Categories
Holiday spending isn't necessarily just buying gifts, but also non-gift items like food or drinks for a holiday dinner or potlucks, outfits for parties, and outings with loved ones.
Track your holiday budget, whether it's on paper, on a spreadsheet, or on software, into categories like gifts, food, eating out/dinners, parties, or anything else that relates to your typical holiday spending. This ensures that you're mindful of where your money is going, and can help you determine whether or not you need to skip a party or two, or re-wear an outfit in order to save money. This also allows you to redirect funds based on what you value most, and what you can afford.
3. Pay with Cash
Studies have found that when making a purchase using a credit card, consumers tend to spend more, while focusing more on the features of an item, and less on its cost. Using cash may feel archaic, but it creates a more tactile and visceral experience when spending, which may help curb overspending. Once you're out of cash for each category you've budgeted for, it's a clear signal that you can't buy anymore. This strategy can help you avoid high interest credit card debt, stay on budget, and enable you to be more mindful and intentional with your holiday shopping than you would be paying with plastic.
Avoid Holiday Stress by Planning Your Purchases
Regardless of how many gifts you're planning to buy, how many events you're attending, or what your holidays look like, planning your gifting list and budget, categorizing your spending categories, and paying with cash are all effective strategies to help you avoid overspending, be more financially mindful and less stressed this holiday season.