Christmas time is the costliest season of the year for shoppers. Americans spend 9X the amount of money retail shopping during the Christmas season than any other season of the year.
Unfortunately, when the calendar turns to January, the negative effects of this spending begin to set in: higher than expected credit card statements, tighter finances than imagined, increased stress and regret over the amount of money spent.
What steps can consumers take today to avoid this January stress and regret? Here are some tips on how to stop overspending this holiday season:
1. Set a budget
Before the holiday shopping season even begins, decide how much money you want to spend. Think through all the different aspects of holiday shopping: gifts, travel, food, decorations. Divide your budget into the different categories: how much do you desire to spend on gifts? how much on travel? how many special events are on your calendar and how much will they cost? If the numbers aren’t lining up, what changes and/or sacrifices do you need to make?
2. Be aware of retail tricks
If merely creating a budget was the only thing needed to keep us within our spending limits, we’d be all set—not just for the holidays, but for life. Unfortunately, this is rarely the case. Even with budgets firmly established, many of us overspend. One reason this happens is because retail stores are shockingly good at getting us to part with our money.
Loyalty cards, retail credit, decoy pricing, loss leader (think Black Friday), incentives to return to the store, refund policies, constant sales—all of these represent tools that retail outlets employ to get us to part with our money. Be on the look-out for them—especially during the holiday season.
3. Limit self-gifting
One of the most significant holiday trends over recent years is the increase in “self-gifting”—people treating themselves to presents when they are out shopping for others.
PS: Be careful when purchasing gift cards, most shoppers end up shopping for themselves when going to a store or website to purchase a gift card.
4. Cut down on convenience costs
Some of the most hidden costs of the holiday season are “convenience” expenses. The holiday season throws us out of our usual family rhythms by adding extra responsibilities and activities. As a result, the price we are willing to pay for convenience begins to rise—sometimes, it is just easier to order fast food when running late for an appointment or getting a pizza for the kids if we need to attend the office holiday party.
In addition, all the time spent shopping leads to other unnecessary purchases: expensive coffee drinks, pretzels, smoothies, just to name a few. These expenses appear minor. But over the course of a month, because of the little factors, they add up quickly.
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