11/22/2007
Ten Tips for Smarter Holiday Budget Planning
The holiday shopping season officially starts on the Friday after Thanksgiving. So, most of us are gearing up to tackle the our holiday budget planning. According to the Retail Federation, Americans will spend an extra $20 billion during November and December. Think about this at a personal level: if you charge an extra $1,000 on your credit card, and pay a minimum of $25 per month with 19% interest, it’ll take you nearly 5 1/2 years to pay for those gifts! And don’t forget that during those years, you’ll face five more holidays with more expenses.
Mint suggests a different approach this year. We’ve collected some ideas on how you can balance your desire to shower your loved ones with gifts, with your need to reach other important financial goals such as reducing debt and increasing savings. But we’re not Scrooge! Here are 10 tips from Mint to help you celebrate the holidays… while keeping your spending in check.
Make a List
- Know what you have. If you can only spare $600, it’s better to know that before you start shopping, instead of shopping blindly per person then attempting damage control afterward. You can use Mint.com to easily determine your average monthly spending by category and set a budget for your holiday gifts.
- Remember non-gift expenses. Holidays expenses don’t stop at gifts. They include travel expenses, gift-wrap, tape, food, household decorations, etc. Account for these things in your budget so there are no surprises.
- Best Option: Use cash. It’s harder to let go of money when it’s real cash. Handing over twenty-five $20 bills for that Play Station for your little brother might make you think twice. How about some new PS games instead of an upgraded player?
- Second Best Option: Don’t spend more that it’ll take to pay off in one month. Friends and family don’t expect you to sacrifice your credit for their happiness. If it’s going to impact your financial health and ability to reach your goals, they won’t want you to spend it.
Check it Twice
- Reduce the length of your “must buy for” list. Make up your “nice” list… and then review it. Do your hairdresser and mailman really need gifts from you? Reduce expenses by sending cards, or letters of praise to their bosses, if you want to share your appreciation.
- Think outside the (gift wrapped) box. Write a poem, sing a song, bake cookies, make arts and crafts, spend time, or make a coupon book for free chores. If buying for more than one person in the same family, buy a group gift-something they can all appreciate.
- Shop online. Malls are designed to get you to spend more money than you’d planned. With online shopping, you can make more objective, smarter purchasing decisions.
Plan Ahead
- Keep detailed records. Know what you bought, for whom, and for how much. Keep a tally of what you’ve spent and what’s left. This will ensure you don’t exceed your limits this year … and will help you plan a budget for next year.
- Put money away. Starting in January, put money away monthly in a high-yield savings or money market account. At the end of the year, you’ll have what you need for your 2008 holiday shopping.
Build your gift giving fund! When you easily earn rates 11 times higher than that of the national average with high-yield accounts, you’ll be better able to meet the budget you have set for your next year’s holiday shopping.
Accelerate your savings. Here are two accounts that offer high-interest.
- E*Trade Max Rate Savings
- No fees & no minimum deposit.
- Sign Up
- HSBC Direct Savings
- No fees & no minimum deposit.
- Sign Up
These are some of the shopping strategies we’ll be using this year. What are some others that you’ve found helpful?
Shop smarter this season. Sign up today for Mint.com to plan and track your holiday spending. You’ll be headed for a happier New Year!