Now that the holiday season is upon us, it’s time to start thinking about how you will spend money during this time. For many of us, the holidays bring higher costs. We buy gifts and decorations, and spend money on food and entertainment.
Before you start spending (even before you begin your Black Friday shopping), it’s a good idea to create a holiday shopping strategy.
Create a Holiday Shopping Budget
Your first step is to create a holiday shopping budget. Be realistic about what you can spend this year. One of the strategies I’ve had in place for a long time is to set aside money for the holidays throughout the year. My holiday shopping strategy includes setting a small amount aside for 10 months of the year so that I don’t end up scrambling to find extra money.
Look at where you stand if you don’t have a holiday shopping fund. You might need to look for ways to earn more money, or cut back in other areas to make a workable holiday shopping budget.
Consider what really matters as well. As my siblings continue to have children, we’ve decided to shift to a gift exchange, rather than buying presents for everyone in the family. This works better for us and saves everyone money since it comes with a price limit. Decide how many parties you want to throw and whether or not you need even more ornaments. Cut back on buying the items that don’t matter as much to you.
How Will You Pay?
You need to decide how you will pay for your holiday expenses in a way that won’t overburden you with debt. Many Americans use credit cards as a preferred method of paying for holiday shopping, but consider using your debit card too.
Using credit cards is a popular holiday shopping strategy because it’s usually possible to earn rewards with your purchases. This can help you make the most of your holiday costs, whether you get cash back or earn free travel. However, it’s important to be careful. You don’t want to end up carrying your holiday debt for months and months. When this happens, you end up paying more in interest charges than your rewards are worth.
I like to use rewards credit cards for my holiday shopping, but then I use the money from my holiday fund to pay off the charges quickly.
Timing is Important Too
Finally, factor the timing of your purchase in your holiday shopping strategy. I almost never buy wrapping paper and decor between Thanksgiving and Christmas. Often, I wait until after New Year, when many items are on clearance. I have fewer options, it’s true, but I can score some great deals. This is likely to be my plan this year because my ex-husband and I divided many of the holiday decorations for the divorce. Even so, I’ll wait until things are heavily discounted before I make my purchases.
Don’t be fooled by Black Friday. Despite the hype, this isn’t always the best time to score good deals. You can find good sale prices before and after Black Friday (and even throughout the year). Keep track of what you really want during the holidays and don’t deviate just because you think you see a good deal.