Every year it seems like the holiday shopping season gets a little longer and a little more intense. What once began on the Friday after Thanksgiving and then crept to the holiday itself now begins as early as the start of November.
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It's easy to get swept up in the excitement, and that can lead to mistakes. If you aren't careful you can end December with credit card bills you can't afford and less money in your bank account than you expected.
Because the frenzy of the season can lead to mistakes, it's important to have a plan. If you go into the holidays knowing exactly how much you plan to spend, it's possible to come out in a solid financial position. To avoid mistakes, however, you need to know what they are, so here's a list of some of the most common ones.
1. Not having a budget
It sounds simple, but many people enter the holiday season with a list of people to buy gifts for, but no budgeted total for their purchases. Make a list of who you need to buy for, who you owe holiday tips to, and any other expenses you plan to incur. With that list in hand, pick a bottom line number that you won't exceed.
That means that if you spend more on a gift for your spouse then you may have to forego something else. The same is true if your holiday travel costs more than expected, or any other expense jumps up. Be honest in your planning and be rigid with your bottom line.
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2. Not being willing to say no
It's understandable that parents would want to give their kids a magical Christmas, Chanukah, or whatever holiday they might be celebrating. The problem is that if the adults can't afford what their kids want, they have to be willing to be, well, the adults.
It does not do your child any favors to spend money you don't have or risk the family's financial future in order to buy gifts. It might lead to tears when the asked-for gift does not appear, but it's also a teachable moment.
If your child wants something you can't afford, then be upfront about it. If it's feasible, set a savings plan, with your kid contributing, to eventually buy the desired item. When that's not realistic either, bite the bullet and talk with your child about the value of money, explaining why you can't always get what you want. That may be a bitter pill to swallow, but it can help instill a life-long responsible attitude toward money that's more valuable than a new Xbox or a bike.
3. Don't run up credit card debt
Just because you have room on your credit card to buy something does not mean you should buy it. Remember that all bills eventually come due, and even 0% financing offers are only valuable if you can pay your balance in full in the allotted time period.
4. Don't go deal crazy
It's easy to see an item at a great price and get swept up in the holiday spirit. But just because that 60-inch TV is on sale for $299 or that bread maker seems like a steal at $99 does not mean you should buy it.
Only buy what you need. If a TV or bread maker is on your shopping list and within your budget, then go ahead. Or, if you see a great deal and can make a swap to fit the item into your list, that's great, but don't buy things you don't need just because the price seems right.
5. Don't focus on price cuts
If you buy a $500 dishwasher for $300, don't look at it as saving $200, view it as spending $300. At the end of the day, you do want to buy items at the best possible price, but you're not really saving money by buying something at a lower-than-usual price if it busts your budget.
6. Don't forget all the other costs
While gifts may be the bulk of your budget, remember to plan for all the other holiday expenses. Remember that travel tends to become more costly between Thanksgiving and Christmas, with everything from airfare to hotel rooms costing more. It's also important to factor in everything from decorations to family photos, and whatever else you might spend money on that's not part of your normal household budget.
7. Don't buy just to buy
If great deals and smart shopping mean you spend less than you budgeted, don't feel pressure to find a way to spend the rest. Get what you need and what you planned for, and save anything that's left for the inevitable rainy day.
8. Don't wait
Holiday shopping is not always a case of the early bird getting the worm, but you can't count on prices going down as the calendar counts down to the end of December. Do your research and know what the items on your list should cost, steadily checking them off as you go. Look for deals and do your homework to see when certain items go on sale, but don't get caught waiting too long and find yourself having to spend more than planned.
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