The holidays are rapidly approaching. And if you’re like most people, you still have quite a lengthy list of friends and family to purchase gifts for. Christmas and Chanukah are a time of good cheer, of enjoying the company of the people you care about, of celebrating a special holiday in special ways.
But this is also the time of year when many of us max out our credit cards, empty our savings accounts, and use up our lines of credit to purchase all sorts of wonderful gifts for the people we love. That means it’s also the most dangerous time of the year for your financial health.
So this time around, the Farber Blog offers you seven handy holiday savings tips you can use to ensure you DON’T break the bank when it comes to your holiday spending:
Build a holiday gift budget and stick to it
Before you embark on your gift shopping expeditions, sit down and determine how much of your disposable income you have for gifts this year. Disposable income is the amount left over after you’ve paid your rent or mortgage, utilities, debt repayments and other necessary monthly expenses.
Grab a pad of paper and jot down all of the necessary expenses (from rent to car payments) that you deal with each month. Then place as accurate a dollar amount next to each item as you can. Third, total everything up and subtract from the amount of after-tax income you earn each month. The final figure will be your disposable income.
Make a list – check it twice
The next step? Make a three column list that will include everyone you’d like to purchase gifts for. Their names go in the left-hand column. In the middle column list the maximum amount you’d like to spend on each of them. Finally, in the far-right column list the items you’d like to purchase for them, and the approximate cost of each item. Now it’s time to review the list and make some serious adjustments to ensure the total money being spent matches the disposable income (see above) you have available for everyone.
Shop early – procrastinators run out of options
This tip is probably coming in a bit too late for most of us (this year, anyhow), but planning ahead is always a wise choice. As the holidays get closer some retailers lower their prices on specific items but supply of those items also drops. The result? Buyer panic. If you can’t plan ahead, try to have a few alternative gift ideas jotted down so that if you find your first choice just isn’t available you can always go with Plan B for that special someone.
The biggest mistake many of us make at this time of year is to end up purchasing something that is far more expensive than the item we could not find in the stores. Don’t blow up your budget in this way! Stick to your list and your budget and you will be a lot happier when all the dust clears!
Avoid “deals” that appear too good to be true
Sometimes a deal isn’t really a deal. Check your prices carefully (a bevy of online tools make it easier than ever to do just that). If you have a smartphone or even a tablet (like an iPad), consider taking it along on your shopping expeditions and keep saved copies of price comparison web pages on-screen so you can compare pricing as you move through the stores. Black Friday and other sale events (for example, Best Buy Canada often hosts client-only evenings at its stores prior to Christmas) may have a few in-stock deals, but the majority of the items up for sale could be available at their regular prices, so know what you’re buying before you put down that debit (or credit) card.
Take some time to research each item on the web before you enter any stores. The time you spend doing some solid research could save you a lot of money this year.
Avoid using department store credit cards
I caution against using any credit if you possibly can avoid it — but especially department store credit cards. Traditionally, many of these cards come with sizable interest rates (above 21%, some as high as 30%) which, if a balance is carried over a period of time following the holidays, could make them extremely difficult for you to pay down. Avoid credit cards at all costs. And when possible avoid using ANY credit – cash is king, but debit is also good, as long as you’re not accessing funds that you had reserved for essential monthly expenses, such as rent.
Make your own greeting cards and buy wrapping paper in bulk
Greeting cards are getting costlier all the time. It is not unreasonable for gift buyers to pay $3.50 or more per card. Add in the high cost of gift bags or expensive wrapping paper, and these extra expenses (which few of us budget for) can really add up as you assemble gifts for your friends and family members. Consider purchasing bulk cards and bulk rolls of wrapping paper at a discount store, such as Costco. And check out your local dollar stores for some terrific savings on individual gift cards and wrapping paper. The choices are getting better all the time.
As a last resort, or if you’re on a really tight budget, reusing gift bags from previous holidays, as well as creating your own attractive Christmas or Chanukah cards on your computer and printer, are possible solutions.
Start planning for next year
Once the gifts have been distributed, the wrapping paper torn asunder, and the excited squeals from children and adults signal that your gift purchasing efforts were successful, it’s time to buckle down and begin planning for NEXT Christmas or Chanukah. One terrific way to avoid going into debt next year is to set up a simple savings account at your local bank and arranging for a small sum from each paycheque to be deposited into it (say, $25 or $50 per pay). You won’t even notice that sum being deducted, and you’ll be surprised at just how much money you’ll have to work with come next October, when the gift buying frenzy will begin anew.
Happy Holidays from all of us at A. Farber & Partners!