Avoid Wallet Frostbite This Christmas

Tuesday, December 10 at 09:50 AM
Category: Personal Finance

With consumer sentiment the highest it’s been since the recession, economists predict shoppers will open their wallets a bit wider this year. Will holiday spending leave shoppers with frostbite on their wallet? Not if they plan wisely and use some common sense tips.

Here are a few tips to help you spend within their means and enjoy a financially happy New Year:

  • Develop a budget. Before you start shopping, develop a realistic budget. Consider your income, subtract your normal monthly expenses, and then add any savings to whatever cash is left over. If you need to use your credit card, then think about what you can afford to pay back in January. Don’t forget costs beyond gifts, like postage, gift wrap, decorations, greeting cards, food, travel and charitable contributions.
  • Make a list and check it twice. Keep your gift list limited to family and close friends, noting how much you want to spend on each. 
  • Spend carefully. Avoid shopping while rushed or under pressure, which can lead to overspending. Make sure to comparison shop online first, or download an app that lets you compare prices before you buy anything in a store. Before you head to the cashier (or online checkout), make sure your purchase is within the budget you set.
  • Avoid traps. Finding a spectacular sale on something you’ve been wanting can easily throw you off course. Stay strong and stick to your budget. Be cautious about applying for store credit cards you don’t need just to get a one-time discount.
  • Use credit wisely. Limit the use of credit for holiday spending. Pick a date when you can pay off your holiday credit card bills, and commit to paying off the balance by that time. Be sure to check statements for unauthorized charges and report them immediately.
  • Save your receipts. Not only will you need them for possible returns, you’ll need them to keep track of what you’ve spent and to compare with your credit card statement. Knowing how much you spent will also help you plan for next year.
  • Be creative. Consider simple, hand-made gifts instead of store-bought ones. Send greeting cards or handwritten notes of appreciation for those outside of your list. Home-baked goods, simple crafts or hand-made gift certificates for your time or talents are often less expensive and more appreciated than what you would buy at a mall or big-box store.

This is the most festive time of year, but consumers don’t have to end up holding a wallet with frostbite when the bills arrive. Simple planning can make the season bright and more care-free when you know you’re in control of your budget.

Reprinted from the American Bankers Association.

Tags: Budgeting, Credit Cards, Financial Education
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