The holidays are right around the corner, so we wanted to address the topic of holiday spending. It can be very easy to overspend during the final couple of months of the year, and we have a few strategies that can be used to prevent this. If you have not read our previous budgeting blogs, you can find them here:
Build Holiday Spending Into Your Annual Budget
To start, we believe that your annual gifting, including any holiday spending, should be built into your overall budget. It may be best to determine how much total you will spend on gifts and then decide how to divide that up between the individuals you are shopping for.
For example, if your budget is $500 then you could decide to spend $200 on each of your parents and then $100 on your significant other. This task obviously becomes harder when you have a tighter budget, or you have a larger amount of people to shop for. While there is no perfect science to determine the spending breakdown, we believe the most important goal should be to stay within your predetermined gifting budget.
This is why we suggest determining your budget before you begin shopping so that you know where your limit is. If you do not do this beforehand, then you might carelessly spend more than you could afford since you did not realize how much the costs have added up before you finished shopping (Equifax).
Compare Prices Before Buying & Watch Out for Fake Deals
One way to potentially save money is to browse different stores or vendors for a specific gift before deciding where to buy it from, including any sales that may be available. Online shopping can make this easy but sometimes deals may differ in the stores.
Different stores tend to have different sales during this holiday season, with Black Friday and Cyber Monday being some of the most popular sale times (Consumer Reports).
Be aware that sometimes a “deal” is nothing more than a marketing tactic. Some retailers will preemptively raise their price just to add a sale, which does not alter the end price, but it does make it seem like the shopper is getting a better deal. This is common on Amazon.
If you want to verify whether a sale is real, you can use CamelCamelCamel to view the full price history of any Amazon item.
Consider Homemade Gifts & Low-Cost Experiences
We want to address that “buying” a gift is normally the more expensive option to pursue. If you have a tighter budget and need to find ways to save on spending, we suggest thinking about either making a homemade gift or planning a low-cost activity to enjoy with the recipient (Equifax).
Homemade gifts can reduce spending and may feel more meaningful to the recipient. Planning a simple low-cost activity, like baking together, going for a walk, or hosting a cozy movie night, can create memorable experiences without straining your budget.
Budgeting for Holidays: Key Takeaways
- We believe your budget for holiday gifting should be established before you begin shopping to help avoid overspending on the unplanned items you find.
- Be aware that sometimes a “deal” is nothing more than a marketing tactic.
- If you are tight on funds, try to find ways to make gifts yourself or plan a low-cost activity to spend time together.
Stay on Track With Your Financial Plan
If you have any questions about retirement, your individual investment portfolio, our 401(k)-recommendation service, or anything else in general, please give our office a call at (586) 226-2100.
If you have had any changes to your income, job, family, health insurance, risk tolerance, or your overall financial situation, please reach out so we can schedule a review meeting.
We hope you learned something today. If you have any feedback or suggestions, we would love to hear them.
Sincerely,
Zachary A. Bachner, CFP®
with contributions from Robert Wink, Kenneth Wink, James Wink, James Baldwin, and Daniel Ladzinski
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