Between family obligations, office parties, gift exchanges and the overload of retail discounts, it doesn’t take long for well-meaning holiday spending to spiral out of control. Whether you’ve avoided setting aside a holiday budget at all or you simply find all those sales hard to ignore, there are plenty of obstacles to leave you wondering where your savings went come January. Stay ahead of the curve and avoid these common spending mistakes so you won’t start the new year with a heap of debt.
Mistake No. 1: Overspending on the extras
Even the most savvy shoppers can fall victim to incidental costs, like $6 rolls of gift wrap, $4 greeting cards and $10 battery packs. And holiday travel and hosting means risking even more of these costly incidentals. Your car goes through more wear and tear during travel between states and your monthly utilities can increase when guests stay over. Before you know it, you may rack up hundreds of dollars worth of charges ranging from gift accessories to oil changes
Solution: Account for everything
Don’t let these costs, big or small, cause you to overextend your wallet. Even if some are unavoidable, you can cushion their impact. Shop smarter at bulk stores like Costco or BJ’s Wholesale Club and don’t be afraid to use coupons. It also helps to build incidentals into your holiday budget from the beginning.
Mistake No. 2: Procrastinating
You don’t have to check off every item on your list over Black Friday weekend, but putting off your shopping until just before the holidays is an easy way to fall into a spending trap. Retailers may raise prices or your options can simply become limited from waiting to purchase gifts too late into this year’s already-shortened shopping season, especially if they’re popular or hard-to-find. The same is true for booking holiday travel, as well. The best time to book your domestic holiday flights was over the weeks between Oct. 8 and Nov. 19.
Solution: Do your research
If you’re in the market for items like clothing, shoes, toys and certain electronics, you may find great deals on Super Saturday (the Saturday before Christmas), but these prices can vary. Start scoping out prices early so you’re prepared when you spot a deal. When it comes to travel, the earlier you book, the better. Because the holidays are a peak travel time, you may not be able to convert your airline miles for the best rate, but if you’re not so concerned about getting the best deal, using miles you’ve already accumulated is one way to spare cash this season
Mistake No. 3: Going into the season without a plan
Perennial holiday over-spenders will be familiar with the feeling of dread that accompanies January’s credit card statement. Each day you put off developing your holiday spending plan, it can become even easier to justify those extra credit card charges and not think about making the actual payments when you’re down to the gift-shopping wire.
Solution: Spread your planning throughout the year
Budget throughout the year so you don’t have to scramble come holiday season. Starting January, put away a small amount each month, then when that bill comes next year, you have the funds for your holiday spending.
Mistake No. 4: Putting financial priorities on the backburner
According to a Nov. 2019 Bankrate survey on holiday spending, while most shoppers are planning to use money they already have for holiday purchases, 18 percent plan to use at least some credit for holiday spending. Don’t allow holiday shopping to slow down your debt payoff or put you behind on your monthly goals.
Solution: Don’t lose sight of your goals
Make sure you cover your regular monthly expenses and savings obligations before you start swiping your credit card. You have to find a balance.
Mistake No. 5: Giving into spending pressures
It can be easy to give in to the pressures of holiday parties, gift exchanges and travel opportunities. In fact, more than 51 percent of Americans feel pressured to spend more money on holiday gifts this year than they’re comfortable with. A lot of times, people that are the most generous with others are those who present as if they have more financial means than they actually have.
Solution: Get creative
You don’t have to give extravagant gifts to prove that you care. Try not to fall into a behavioral pattern of trying to compensate with spending money on things, because time and love are more valuable than anything you can buy. Handmade gifts and homemade foods are always an option. Suggest a group gift swap.
To avoid regret come January, keep your perspective this season. Put your bigger goals and budget in focus, and be honest with your loved ones about your spending limits. The holiday season is so much fun, but it can be so stressful. If we get too much out of our normal habits and go crazy, we just end up unhappy and frustrated in the end. It’s all about balance.
As a part of your Holiday Spending Plan, open a Christmas Club Account at Willis-Knighton Federal Credit Union, set up payroll deduction for any amount you decide will fit your needs and your Holiday Money will be waiting for you on Oct. 1, 2020. WKFCU also offers a Holiday Loan for $1,000 with a 10% APR* that is paid off in 10 months, before the next season begins.
(Reprinted in part from an article on Bankrate by Kendall Little. Annual Percentage Rate. Some Restrictions Apply. Limited Time Offer)
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