Avoiding holiday financial messes
The holidays are a time of giving — and spending. A frugal living expert offers tips to avoid a budget nightmare.
The amount of money Americans spend during the holidays is pretty incredible. In 2015, holiday retail sales totaled more than $630 billion, according to Statista. With so much money being spent, it makes sense that so many people find themselves in post-holiday debt. Indeed, according to the TD Bank Merry Money Survey, 78 percent of Americans have overspent on holiday purchases in the past.
Luckily for you, there are ways to save during the holidays without incurring serious damage.
“The magic is in the budget,” said Lauren Greutman, frugal-living expert and author of the book “The Recovering Spender.”
Get ahead with your spending plan
Not enough Americans make holiday budgets. Only 52 percent of Americans create a holiday budget, according to the TD Bank survey.
Planning is almost always essential to maintaining good financial standing.
“Set a budget and stick to it,” said Howard Schaffer of Offers.com.
Make sure your plan is pre-emptive, so you have a good idea of how your shopping will affect your budget. Schaffer suggested setting a spending limit for each person that you’re buying presents for.
Know where you stand financially
You can’t begin addressing your holiday spending issues without having a realistic picture of your finances. Realism requires honesty and for you to thoroughly evaluate your money.
“Print out the last three months of (your) spending,” Greutman said. “Separate everything into categories. Take an average of the past three months spending in each category. This is the number they will start with in their budget.”
Make a plan to pay off your debt
“The most effective way to mitigate the damage done by holiday overspending is to develop a strict plan for saving, paying off credit card purchases and reducing disposable spending in the post-holiday months,” said James Capolongo, head of consumer deposit products for TD Bank.
Make a list of your holiday spending and categorize purchases on a scale from the most important expenses down to the least important expense, Greutman said.
If you run out of money to allocate to certain categories, these expenses are the ones you need to focus on most to help you recover from the holidays.
Beware of after-holiday sales
Temptations are difficult to keep at bay, and one of the most enticing is to keep on shopping, even after the holidays have passed. And with so much momentum going, it can be hard to rein in your spending, especially if you’re surrounded by after-holiday sales — even after you’ve already spent so much.
Post-holiday sales prey on Americans’ shopping behavior. In fact, according to TD Bank’s survey, the biggest reason people spend over their budget is because of impulse purchases.