In 2017, the average American racked up more than $1,000 in debt while shopping for holiday gifts. That represented an increase of more than 5 percent when compared to the previous year’s holiday spending.
Were you one of the millions of people who spent more than you planned on holiday gifts last year? If so, there’s a simple way that you can avoid doing it again in 2018.
This year, create a holiday budget before the Christmas season rolls around–and then stick to it! It’ll prevent you from having to spend the first few months of the new year paying off all the debt you accumulated.
Check out 7 tips for creating and sticking to a holiday budget below.
1. Figure Out How Much You Can Afford to Spend on Holiday Gifts
Before you start putting a holiday budget together, it’s a good idea to go through your finances, crunch the numbers, and decide how much you can afford to spend on gifts this holiday season.
Ideally, you should do this as early as possible to give yourself some time to set aside money that’s specifically earmarked for gifts. But even if you wait until November or even December to do it, you can still analyze your financial situation to see where you stand.
Your goal should be to come up with a number that represents what you can spend on the holidays without digging yourself into debt.
2. Create a List of People You Want to Buy Gifts For
Once you’ve decided how much you can spend on others this holiday season, take some time to figure out who you’re going to be buying for. It’s best to sit down and make a list of all the people who will be on your list.
A lot of people don’t do this, and as a result, they forget to buy gifts for a bunch of people during their first or second round of Christmas shopping. They end up blowing their budget on those shopping trips and then have to spend over and above what they planned on spending to round out their list.
By generating a list of people that you’re going to buy for from the very beginning, you’ll avoid having to scrounge together money later to purchase gifts for people you forgot. Your list should include everyone from significant others and parents to coworkers and even your newspaper delivery person.
3. Allot a Specific Portion of Your Holiday Budget to Each Person
After you have a firm budget in mind and a list of people you need to shop for, you can go through your list and allocate a percentage of your budget to each person.
Start at a top of the list with the people who are most important to you and work your way down to those you might only buy smaller gifts for. This will help you to see what you can afford to spend on each individual person on your list.
It might take a couple hours to tighten up your holiday budget. But when you finish, you’ll have a set dollar amount that you can spend on everyone on your list. You’ll feel good about where you stand before you purchase a single item for anyone.
4. Decide Exactly What You Want to Get for Everyone
Many Americans wait until they’re standing in a store to decide what they’re going to buy for people on their list. They browse through stores, randomly picking out items they think others will like.
Why take this approach when you could head out on a holiday shopping trip already armed with a list of the things you’re going to buy? It’ll save you a ton of time and money in the end.
Go down your list of people and write what you want to buy for them next to their name. Feel free to use the internet to shop around for things you think they might like, but don’t get tricked into buying anything just yet.
By doing this, you’ll be able to make sure you can afford to buy the things you want to purchase for people before venturing out to the mall.
5. See If There Are Ways to Spend Time, Not Money, on Certain People
While you’re deciding what people on your list might want, think about if there are ways to spend time, not money, on certain people.
For example, your grandparents probably didn’t get a whole lot of use out of the matching sweaters you got for them last year. So rather than going that route again this year, how about offering to help them organize their old photos as a Christmas gift?
Or instead of buying a bunch of candles for your sister like you did last year, how about offering to babysit her three kids on New Year’s Eve so that she can go out and celebrate for the first time in forever? She’ll likely appreciate that more than any gift.
If you can find ways to spend time instead of money on people, you can trim your budget down more than you already have. You can spend the money on someone else or, better yet, save it and make sure you don’t end up in debt this holiday season.
6. Search for Coupons for the Items on Your Shopping List
While you can get away with offering up your time instead of an actual gift to some people on your holiday spending list, you won’t be able to do it for everyone. But that doesn’t mean you can’t still find ways to save when you’re out shopping.
Prior to purchasing any gift on your list, search for coupons or coupon codes for it. You should also price shop to see if you can find whatever you’re buying for a cheaper price elsewhere.
You could conceivably save $100 or more by couponing while Christmas shopping.
7. Stick to Your List When Doing Your Holiday Shopping
It’s not all that hard to create a holiday budget. What is hard, though, is actually sticking to your budget once you start walking around at the mall.
Before long, you’re going to see something that you just know your mom, your brother, or your next-door neighbor will love. And you’re just going to have to have it!
Don’t let yourself fall into that trap. You spent all that time making a holiday budget, so stick to it. You’ll be glad you did when January rolls around and you don’t have a single dollar of debt to pay back.
Use Your Holiday Budget to Steer Clear of Debt This Year
When you start creating a holiday budget for the first time, it can be a little bit difficult. Figuring out how much money you’re going to spend on others isn’t as fun as just going out to the store and picking out whatever you want to buy.
But once you get the hang of it, it can actually be a lot of fun. It’ll force you to find personal gifts for people that fit into your budget. And it’ll allow you to get into the Christmas spirit without going into debt in the process.
Read our blog for more excellent tips on managing your finances more effectively.