The Winter holiday season in America has become a monthslong shopping extravaganza. And as the ever-expanding Black Friday and Cyber Monday sales indicate, Americans continue to plan their holidays around their wallets.
While it’s not uncommon for Americans to rack up some amount of debt during the holiday season, they can use these tips to avoid complications because of it.
Set a SMART Budget for Yourself
Avoiding debt requires a plan. A budget is a goal, and many organizations and leaders use the SMART acronym for setting goals. The letters in the acronym stand for Specific, Measurable, Achievable, Realistic and Timely. Here’s how it works with budgeting: Specify the amount of money you have to spend during the holidays and measure your progress by writing down transactions, checking your credit card account and reviewing your bank statements. The achievable and realistic parts of budget goal-setting go hand in hand: Seriously consider how much you can afford to spend and set yourself up for success by adjusting your shopping plans. If you want to stay on budget, you may have to get creative in your gift-giving.
Finally, make sure your budget is timely. You might think adding a little credit card debt will be fine now, but should something happen while you’re trying to pay it off, a little holiday splurge could get out of hand.
Don’t Add Debt Without a Plan in Place
If you have to use a credit card or personal loan to shop for the holidays, have a plan for paying it off. Interest rates can easily multiply what you spend in December and make you pay for years to come. Budget your debt like you would your cash. Only allow yourself to accrue as much debt as you can pay off in a predetermined amount of time. If you take advantage of a zero percent APR offer, make sure you can pay off the debt before the interest kicks in.
Plan Your Gifts in Advance
If you’ve been planning your gift-giving carefully or purchasing gifts throughout the year, you’re ahead of the game. But if not, there’s still time for you to make a plan. Determine your gift recipients and what you would like to get each person. This way, you avoid browsing in the stores, which can lead to temptation and impulse buys that can derail your budget in a single transaction.
Be a Savvy Shopper
Black Friday is over, but many stores have the same deals – or even better ones – throughout the holiday season. Once you’ve created a shopping list, do some research on where to get the best deals. Use apps and websites to get coupons and extra discounts.
Keep Track of All Your Spending
Along with measuring your progress and maintaining your shopping budget, keep track of your typical spending to help prevent overspending in other areas. The holidays are made even more expensive by traveling, going out to eat, seeing shows and attending other events. Make sure to factor these expenses into your budget. If you’re someone who eats out a lot anyway, try to cut back and spend that money on gifts if needed.
Don’t Let It Get Personal
Yes, gifts should be personal, but prices don’t have to be. Try not to worry about whom you spend more on because the meaning behind a gift is not always tied to the amount spent. After all, what good does it do anyone for you to spend $15 on a random trinket for your brother just so you can say you spent as much on him as you did your sister? Surely there can be tiers of price ranges you use. For example, you’ll limit yourself to $20 for a gift for a friend and $50 for a family member, but keep in mind the big picture. As long as you’re staying within your budget, you can allocate money however you need.
Remember What the Holidays Are About
It’s the timeless lesson Ebenezer Scrooge and the Grinch have been telling us all along: The holidays are not about the things you can buy. It really is a time to spend with your loved ones and celebrate traditions. It’s a played-out cliché, but an important one to remember. Your loved ones would not ask you to put yourself in a financially risky situation to get them expensive gifts. Love is not measured by how much you spend on someone, but rather in other ways you invest in your relationship with them.