Last Updated: November 15, 2010
One of the few good things about a tough economy at holiday time is that it underscores the need to consider what’s really essential. And while what’s essential isn’t always about money or presents, setting spending priorities early is a way to keep the year’s biggest spending season worry-free and most important, debt-free.
Here are some suggestions that can help you stay on budget during the holidays and position yourself for a financially healthy New Year:
Give yourself the gift of solid financial advice: If you’ve never gotten feedback on your overall financial picture before, set aside a certain part of your holiday budget to visit a qualified financial planner. Think big picture — year-round budgeting, planning for retirement and affording other milestones. It will underscore that the money you save and invest today can yield big dividends down the road.
Take the cash challenge: Before you start spending, sit down and figure out what you currently owe on credit cards and any other loans. Then figure out how much spending you can realistically do with the cash you have left. That’s right. Cash. See what it will take to cover all your bills and create a list that conforms to what you’ll be able to spend in cash alone.
Reset your gift policy: Does everyone on your gift list over the age of 21 really need a present? The answer is as individual as your family and friends. But, if you think it might be welcome, make a suggestion for a gift drawing, a budget limit, or a moratorium on gifts for adults or some other alternative where you trade off gifts for help with chores or quality time. For instance, you might agree to take each other out to dinner during the New Year or find some other fun way to spend time together. You could help a friend or family member with a household project that could save them money. And in the end, children seem to enjoy their holiday gifts the most, so focus on buying presents for them.
Create a practical, money-saving gift list: For some, this may mean one big sheet of paper you can write on or a computer file that can be printed out on a single sheet. But it’s important to have a list that’s handy and displays everything you need to spend in a single view. This way, if you spot an item on sale, you can snag it and cross it off. Keeping gift ideas on scratch pads and napkins gets disorganized in a hurry, and it’s easy to start spending money in an equally disorganized way. A centralized list lets you check off things as you go, substitute ideas with the click of a pen (or a mouse) and keeps you on track. A computerized list might offer additional advantages:
- You can collect initial gift ideas by name and then re-sort them by store destination, which can save time and gasoline.
- You can add an extra column that reminds you what you bought each person last year as well as sizes and color preferences. You might also note what you spent last year on that person or family.
- If you’re shopping online, you can copy links to the merchandise you’re planning to buy so when it’s time to spend, you don’t have to waste time on a new search.
Browse online, and then compare at local stores: Whether you plan to spend online is a separate issue, but browsing online can be a very good idea. “Shop-bot” price comparison websites can help you determine general price ranges for gifts you need that are sold online. Once you have those ranges, get on the phone and determine whether you can buy the same items more affordably at retailers close to home — if you can save yourself a trip or consolidate your trips, you’ll save time and gas. And if you do end up buying online, don’t forget taxes, shipping or return policies before you click “complete my order.” Those fees and restrictions can end up costing you considerable money.
Get those coupons: Retailers liberally dole out coupons at the holidays, but don’t stop at those that arrive in the mail or inside your local newspaper. Increasingly, online coupon sites can make a huge difference in what you’ll pay for online merchandise in terms of item discounts and deals on shipping. Finding coupons that work can take a bit of trial-and-error — coupon sites come and go and the coupons they list don’t always work. But type the name of your retailer and the words “coupons” or “discount codes,” see what comes up, and then follow the instructions. Manufacturers are another coupon resource — go to their websites and see if they’re offering printable coupons or discount codes for the merchandise you’re looking for.
Don’t forget charity: Tax benefits aside, it makes sense to budget for charities at the end of the year. In a rough economy, people tend to take care of themselves before they take care of others, so set aside money you plan to give before Dec. 31. And if you have kids, helping others is not a bad idea to teach during the holiday season.