Take the time to make smart financial choices during the holidays — you’ll feel great about it in January.
If you’re focused on smart spending that won’t break your bank, the holiday shopping season will truly put your budgeting skills to the test.
Increased spending this time of year is all but inevitable: American consumers are expected to spend an average of more than $1,000 during the 2018 winter holiday season, up 4.1 percent from last year. Retail companies make most of their annual revenues during the next several weeks, which is why it’s so important to be smart about where and when you spend.
To ensure you don’t overspend on that special someone in your life — or worse, wind up carrying that debt into 2019 — you need to prepare. We’ve assembled 9 holiday shopping and budgeting tips to help you navigate the impending spending surge and put you in better financial shape.
1. Make a plan.
Start by creating a detailed list about the gifts you plan to purchase. This is how you hold yourself accountable. Feel free to add more to the list, but make sure it answers these questions:
- Who are the gifts for?
- How much money am I comfortable spending?
- Which credit cards should I use?
Once you spell this out, dig into the details. It’s important to know what you’re working with before you try to take advantage of holiday shopping deals. Plus, it’s easier to find those deals if you’re prepared.
Don’t leave anyone off your list: Remembering family members and close friends is easy, but don’t forget neighbors, co-workers, classmates and anyone else you’d like to show appreciation.
This list can grow quickly, so set aside some money if you expect a few more gifts to arise.
2. Stick to the plan.
The holiday spirit flows freely, and if you go to the store without a plan, you’ll pay for it — literally.
Your plan is what keeps you in check as bright, shiny ideas dance before your eyes. You might be tempted to stray from the plan when you start shopping … Don’t!
Even a few extra gifts will add up faster than you think. That’s why it’s important to start with a detailed list.
You’ll thank yourself when you start out 2019 debt-free.
3. Pre-manage your debt.
Try to pay down your credit card balance before you go shopping. At the very least, it’ll help ensure you don’t go over your credit limit during the holiday months.
If done right, it can minimize the interest payments on your November and December credit card statements. It can also keep your credit utilization rate low, which is good for your credit score.
Remember: Credit card companies calculate how much interest you owe on a daily basis. So it’s better to make smaller, more frequent payments — especially if you’re anticipating a big balance — than to wait until the end of the billing cycle to pay off your bill.
4. Dig into credit card details.
Before you begin your holiday shopping, ask yourself a few questions about your credit cards:
- What is the APR on each card?
- How much of a balance are you carrying
- Which card has a rewards program?
- Do you have specific retail cards?
These questions should tell you how, where and when to shop for the best deals of the season.
For example: If you have a card with a high balance and no immediate plan to pay it off, consider not using it at all.
Conversely: A credit card with a 0% interest promotional rate could give you time to pay off your balances in the months following the holidays. (Make sure to thoroughly vet the card details because your credit score will take a slight hit.)
5. Consider shopping online.
The e-commerce industry is well-equipped to handle people’s holiday shopping needs. You don’t have to waste in line and you can compare products easily.
A majority of American consumers prefer to do their holiday shopping online, rather than in person, and 60 percent plan to make purchases of some sort during the Black Friday weekend.
Simply put, online shopping allows for more data at your disposal, at that data can help guarantee you’re making the best decision for both your loved ones and your financial health.
6. Do your homework.
Retailers are quick to claim you’re getting a great bargain, but that isn’t always the case.
Oftentimes, a company will raise the price of an item shortly before big sales events like Black Friday, so they can brag about it’s heavily discounted sticker price. Fortunately, thanks to the growth of online shopping, there are tons of tools to ensure you’re getting the best possible.
Product-review websites can help you identify which products are the best on the internet. If you’re shopping on Amazon, for example, you can use specific services that track prices and let you know if you’re actually getting a steal.
7. Leverage your rewards.
Those points and rewards you’re earning on your credit cards every month? The holidays are a great time to use them!
Understanding the terms of a rewards card can be a huge help over the holidays. Some rewards cards are partnered with retailers, so you’ll want to go through the offers before starting your holiday shopping spree. Others even allow you to trade points for gift cards.
Every card is different, but it’s usually clear where you can find value with your reward card by checking your account-holder portal.
And for the people at the top of your gift list, consider using your travel-points card to buy a fun vacation that would be a real highlight of the year. But before you open a new account, be aware that most rewards cards have high APRs.
8. Be on the prowl for deals.
Many companies offer loyalty rewards and will be generous with them during the Black Friday weekend. Sign up for loyalty rewards early to ensure you’re notified about them when the time comes.
Check your email inbox regularly on Black Friday and Cyber Monday — and in the days leading up — to make sure you don’t miss an offer that would get that perfect gift back within budget.
When the big days are here, it’ll be much more difficult to sign up for the loyalty programs — and you might miss the rewards entirely.
Best of all, most of these programs won’t cost you a thing.
9. Don’t overthink it.
The best product on the market won’t necessarily fit into your budget — and this is why you start with a detailed plan.
Find a version that works for you. With the growth of online shopping, more products are available than ever, and many generic products are just as good as the name brand.
Yes, this may require some additional research, but think about it as part of the gift. Your loved ones will appreciate the time you spend on the gift, and you’ll love how good your finances look in January.