November is almost here, and with it comes the “Holiday Season”. Time for over-eating, over-indulging, and over-spending! But it doesn’t have to be that way. There are plenty of articles about managing your weight during the holidays, and if you decide to go out drinking remember to ride-share (Uber, Lyft, etc.) and stay safe. But the over-spending part of this season isn’t something we usually talk about.
The over-spending threat is real. I’ve seen people paying off credit card debt in June for gifts bought the previous December. Not only is that poor financial practice (unless the credit cards were at 0% and you could have paid them off at any time), but it’s also emotionally unhealthy. Every time that I’ve witnessed this behavior I’ve also seen a tension between the spouses involved over-spending habits, a tension that occasionally leads to divorce.
“But gift giving is my love language!” is invariably the response, which is great. I’d love to be adopted into your family and be loved by you. But what if I told you there are ways that you can give extravagant gifts without putting your finances or your marriage at risk? Here are a few tips that can help you survive the holidays with your budget intact.
Make a List and Check it Twice
One behavior I see in holiday over-spenders is the impulse buy. You’re at the store thinking through if you’ve covered everyone and you suddenly see the PERFECT gift for Uncle Henry, and for only $19.99 when it’s usually $29.99--that’s practically a steal! What you have forgotten in the moment, however, is that you’ve already bought dear Uncle Henry a different PERFECT gift and that you had wanted to only spend $10 on each aunt or uncle.
In our family, we build a spreadsheet in Google which we can access on our phones while in the store. In the spreadsheet, we put a soft limit on spending by category (spouse, kids, parents, siblings, nieces and nephews, aunts and uncles, grandparents, friends, etc.) as well as a few ideas for gifts. Then when we’ve bought something we add the gift we bought, where we hid it if necessary, and how much it cost. This way we have our budget, and actual spending that we can both look at any time (with the exception of gifts for each other).
Be Creative
After summing up your planned spending for a holiday you may be floored by the sum. Don’t forget that in addition to gifts there will be additional food, drinks, and other entertainment expenses as well as travel costs. Here’s where some creativity can help. Based on your talents there may be crafts that you can make that are cheaper alternatives to the gifts you would otherwise give. One gift that we’ve started making for certain family members in recent years is their favorite holiday treat, just for them. A tin of homemade cookies often makes a better gift than that impulse item set near the register (seriously who needs a miniature desktop billiards table?) For other family members we’ve gone to a local farmers market and bought homema
de jams, honey, or salsa as gifts.
Do Your Homework
Okay, first you can’t trust the MSRP to tell you the “market price” of a good. To do that you need to check prices elsewhere. For that, I have the Amazon app on my phone and I’ll use the scan function to find the exact item that I’m looking at in the store and see if I can get it cheaper online. If I’m going to do this I don’t accept help from the store’s clerks. I don’t want to use their help to find the best item, then not support the store because I can get it cheaper elsewhere.
For big-ticket items, stores have figured out that people do this and each store has a slightly different model. For instance a few months ago we bought a new tv and decided to go with a TCL Roku TV (which I highly recommend). When I was researching TVs I found that most retailers have very slightly different models of the same TVs. For instance, the TV we bought from Amazon was the same one I could have picked up at Best Buy, but the remote was slightly different. With patience and research, you can cut through this obfuscation and come to the best purchase decision for your needs.
Plan Ahead
I once had a boss that was so proud to hand me a Christmas bonus because “now” I could afford to buy presents for my family. I was pleased to inform him that I had already finished all of my Christmas shopping and I had other plans on how to use my bonus money.
In our family, we budget a little bit of money each month for large annual expenses. This way instead of needing to find a large sum of money in our December budget (and hope against hope for an end of year bonus to match), we put away smaller sums throughout the year. If you think about it this is the same as paying off a credit card, except you’re paying yourself, and if you put that money in a high-interest savings account while it’s hanging around you’re even getting paid interest instead of paying interest.
This also allows us to buy things throughout the year that catch our eye as great gifts without breaking our budget. My kids’ current big present has been sitting in my closet since March. Luckily they aren’t old enough to start snooping in the closet for gifts yet. Soon I’ll have to be more creative in my gift hiding.
Don’t Believe the Hype
Black Friday got its name because that was the day most retail stores were finally able to get out of the red and into the black and start making a profit for the year. This is no longer the case, but the name has stuck. As someone whose first job was in retail let me tell you a little secret: most of the items you find in a store on Black Friday aren’t on sale. Most stores will have a limited number of a highly sought-after item at an excellent price to draw people in, and enough items on sale to make people comfortable buying more and then encourage customers to go ahead and “finish off” their Christmas list even though items aren’t on sale. If you plan on shopping on Black Friday, have an idea of what you’d like to buy, and what price you consider low enough to pay to get it. If you don’t know what a good price is you can check pricing sites like CamelCamelCamel (which follows Amazon prices) to see the price history of the item.
Pot Luck
If you enjoy hosting during the holidays one of your big expenses may not be gifts, but food and beverages for your guests. One way to stay on budget if you want to be the host is to ask your guest to bring something for the event. It could be that you ask everyone to bring a favorite drink, a dessert to share, a side dish, or that you set the theme and just ask everyone to sign up for what they want to contribute (this requires a lot more work and involves some risk).
Start Your Own Traditions
For some, this will be the hardest advice to implement. When we were living in Oregon, flying to Texas for a holiday meant more than $2,400 in airline tickets, $80 to park the car for a few days at an airport lot, several days of PTO, and an amazing amount of stress (no one likes being in the airport when it’s hectic). So to save money and sanity we decided we would no longer travel for holidays. Instead, we would try to find a time to visit family that was less hectic and had cheaper flights. We could often find times when half the country wasn’t in the airport with us, and where the family could fly for about $1,800. We also made an open invitation to our holidays for all friends and family that wanted to visit, then connected with friends in town that were also not traveling for that holiday to celebrate Thanksgiving or Christmas Eve together.
Regardless of the holidays that you will be celebrating this year keep in mind that the reason we celebrate is not to spend money. Your friends and family want something more precious than your money this year--your time. Happy Holidays!