'Tis the season to blow your budget. Don't let your hard work on personal finance goals this year be undone by careless holiday spending. Follow these tips to enjoy the gifting season without the New Year's financial hangover.
DO Make a list—and a budget.
Figure out how much you can afford to spend during the holidays—include gifts, travel, entertaining and all the other costs you can think of that crop up this time of year. Consider cutting back on other expenses (i.e. bring your lunch to work this month) to free up cash for the holidays.
Next make a list of the friends, family, and loved ones for whom you need to buy gifts and some ideas that fit within that portion of your budget—setting this all down ahead of time will help you stick to your budget and avoid temptation at stores. Giving a few homemade gifts or offering to provide a service such as babysitting can help stretch your budget further.
DON'T Go into debt for the holidays.
If you do use credit cards for holiday purchases, don't buy more than you can pay off at the end of the month: High interest rates on that unpaid balance will likely follow you into the New Year and cost a lot more in the long term. Another holiday debt no-no? Don't take a loan from your 401(k) or 403(b) to finance your gift-giving. We know the pressure to buy is intense during this time of year—but it's not worth putting your retirement savings at risk.
DO Take advantage of holiday deals.
Between Black Friday and other holiday sales, there are plenty of ways for savvy shoppers to save on purchases this time of year. Today, for example, it is easier than ever to comparison shop—you can peruse most retailers' sales and promotions online to make sure that you're getting the best possible price for an item. Many stores will match competitors' prices as well if you show them proof of a lower advertised price.
Sign up for your favorite stores' email newsletters, follow them on social media to learn about upcoming sales and get valuable coupons, and always search for online coupon codes before checking out to secure further discounts.
DON'T Put off shopping until the last minute if you’re an impulse shopper.
The longer you wait to start your holiday shopping, the more likely you are to spend in a panic and go over budget ("I just need to get him/her something!”)—so make a list now, check it twice, and go early.
DO Suggest a Secret Santa.
Feel like your gift-giving list is starting to rival Ol' Saint Nick? Ask around at work or your next family gathering to see if there's interest in drawing names and exchanging just one gift each—preferably with a cap on how much will be spent. In large families, perhaps limit the gift giving to children only. The chance to cut costs on their own holiday budgets might very well be received as a gift in and of itself by your fellow revelers.
DON'T Stop contributing to your savings account or retirement plan.
Consider these contributions a holiday gift to your future self. If you haven't already, automate withdrawals from your paycheck or checking account so you won't be tempted to forego saving during times such as the holidays when expenses get higher.
While spending more than you intended during the holidays is common, it's not unavoidable. Smart planning now can help you keep your budget in check and ensure that you remain on track toward meeting both your short- and long-term financial goals.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917