While there are plenty of money-saving opportunities to help you stretch your holiday shopping dollars further, poor purchasing decisions can wreak havoc on your budget. To avoid going broke this season, review these holiday shopping pitfalls and learn how to make better buying decisions.
Break these habits to keep your wallet intact this season.
The holidays put people in the gift-giving mood, but those who don’t watch their spending will find themselves feeling less than jolly when credit card bills arrive in January. According to the Holiday 2018 Consumer Trends survey from the National Retail Federation, consumers say they will spend an average of $1,007 on gifts, food and other festive expenses this year, up by more than 4 percent compared to 2017. While there are plenty of money-saving opportunities to help you stretch your holiday shopping dollars further, poor purchasing decisions can wreak havoc on your budget. To avoid going broke this season, review these holiday shopping pitfalls and learn how to make better buying decisions.
Buying gifts for everyone.
When you get into the gift-giving spirit, it’s easy to fall into the trap of wanting to buy something for everyone in your life, from family and friends to yoga instructors and baristas. Ultimately, this is not necessary or expected, says Farnoosh Torabi, personal finance expert, author and host of the “So Money” podcast. This doesn’t mean you have to turn into a scrooge though. Just think about other ways to show you care. “Handwritten cards and home-baked goods are great substitutes for store-bought gifts,” Torabi says.
Shopping without a plan.
Failing to set a holiday budget is the most common financial misstep this time of year. It’s easy to overspend if you’re not clear about your limits, says Janet Alvarez, personal finance expert and executive editor at WiseBread.com, a personal finance website. To come up with a holiday budget, look at what you spent on gifts and travel last year and compare it to your monthly expenses to figure out what you can realistically afford. Just make sure to add wiggle room for unexpected expenses and one or two unanticipated gifts, Alvarez suggests. And keep in mind, you may need to tweak your gift spending plan so you don’t go into debt.
Overindulging on presents for yourself.
If you buy a gift for yourself every time you pick one up for a loved one, you’re going to end up over budget and in debt. Always give yourself 24 hours to consider any unplanned purchase or add the item to your wish list to help family and friends with their holiday shopping. When it comes to indulging in other seasonal temptations such as spa treatments, consider postponing such additional expenses until after the New Year to better manage your cash flow, Torabi says.
Believing expensive gifts are best.
Some people see extravagant gifts as more significant, and many are willing to go into debt to afford them. However, the best presents are personalized and thoughtful. “Recognize that holiday gifts needn’t be the most ostentatious displays of affection, and can be simple or heartfelt,” Alvarez says. Consider giving experience gifts such tickets to a sporting event or make plans to take the kids so their parents can enjoy a date night. Ultimately, it’s the thought, not the price tag, that makes a present memorable.
Failing to compare prices.
Don’t assume the sale price is the best price you can get. Spending a little time comparing prices and searching for coupons can result in major savings. “A quick search online can help you save an extra 15 to 20 percent off or more on a gift,” says John Schmoll, founder and blogger at FrugalRules.com. Whether shopping online or in store, Schmoll suggests running a quick search to compare prices across popular stores such as Target, Walmart or Amazon. Free shopping apps like ShopSavvy and ScanLife, compatible with iOS and Android devices, provide an instant price comparison on your mobile device. Use these tools to see if the retailer will match a competitor’s price and save you time of driving to another store.
Buying bundle upsells.
Retailers will try to persuade you to spend more by offering bundle sets that appear like a great value, whether it be a video gaming console with multiple games and controllers or a beauty kit with multiple products. However, this upsell strategy doesn’t always provide significant savings, cautions Bobbi Rebell, financial expert, author and host of the “Financial Grownup” podcast. “If you look closely, sometimes the savings are minuscule,” she says. Ultimately, you shouldn’t spend more on something you don’t need, even if you’re getting a deal.
Opening multiple store cards for extra discounts.
Retail associates will push store cards that offer an additional discount of 10 to 20 percent off your purchase on top of already enticing sales. Though extra deals may be tempting, make sure you consider the terms carefully. These cards carry high interest rates with low credit limits and expensive fees. Plus, you’re likely to spend more in the single transaction to benefit from the savings. It’s better to stick with a single credit card that offers cash back or frequent flyer miles to maximize rewards. Otherwise, shop with cash. “This will help you think through your purchases a bit more, while also avoiding debt come January,” Schmoll says.
Having a fear of missing the best deals.
Holiday shoppers often spend more than they planned due to the fear of missing a great deal, says Kumiko R. Love, accredited financial educator at TheBudgetMom.com. The lure of a sale is hard to avoid, but ask yourself if you would buy the item at regular price. If not, you don’t need it. Prevent temptations from getting the best of your budget by turning off push notifications in retail apps that send sale alerts, and unsubscribe from store newsletters. Instead, search for the sales when you’re shopping and stick to your list. “If it’s not on your list and not in your budget, it’s not something you need at that moment, even if it’s on sale,” Love says.
Buying more to maximize savings.
If you find yourself spending more to get a bigger discount — whether you are tempted by buy two, get one free promotions or spending $100 to get $20 off deals — chances are you’re buying items you really don’t need. No matter how little you pay for an item, it’s a waste of money if you don’t need it. Don’t let big discount claims influence your purchase decision. It’s ultimately smarter to spend less even if you don’t get as much of savings. If you want to take advantage of buying in bulk, get a friend or family member to split the purchase instead.