Plan ahead to avoid overspending when you buy your holiday gifts.
It’s not even Halloween and store aisles are already filling up with Christmas items. Before you say bah humbug, consider the benefits of getting in the holiday spirit now — the spirit of preparing your finances for the biggest spending season of the year, that is.
Buying gifts, decorations, food and more for the winter holidays can put a big dent in your finances. The average holiday spending per person in 2015 was more than $800, according to the National Retail Federation. Consumers will likely spend even more this year, considering holiday spending has increased every year since 2009.
To keep Christmas spending under control and avoid racking up debt, there are several steps you can take before December. Here’s what you can do now to prepare your finances for the holidays.
FIGURE OUT WHAT YOU CAN AFFORD TO SPEND
Before any big spending event during the holidays, “It’s good to take stock to see where you stand and what you can afford,” said Michelle Brownstein, a certified financial planner and director of private client services at wealth management company Personal Capital.
Start by tracking expenses and income to see how much money you have coming in and how much you’re spending in a normal month. Then, figure out how much you plan to spend on the holidays for gifts, decorations, entertaining and other items.
This will give you an idea of how much you need to start setting aside now in a savings account and whether you need to trim your regular spending to add cash to that holiday fund. As the holidays approach, spend only the cash you’ve set aside.
“Setting and sticking to that budget is the key to not ending up in a bad financial spot,” said Brownstein.
CUT COSTS TO HAVE MORE MONEY FOR THE HOLIDAYS
You can build your holiday fund over the next couple of months by trimming costs. Target big expenses, such as cutting cable TV and reducing how much you spend on groceries.
You could save an average of $100 a month if you eliminate cable service alone, said Chris Peach, a financial coach and founder of MoneyPeach.com. And without TV to distract you, you’ll have more time to make extra cash for the holidays.
After housing, food is the second biggest expense in American households, according to the U.S. Bureau of Labor Statistics. It’s also one of the toughest areas to stay on budget, said Peach. To trim this major expense so you can stash more in a holiday fund, Peach recommended setting a grocery budget by putting cash in an envelope and spending only that amount.
“When the envelope runs out for the month, no more buying groceries,” he said. So, you’ll have to shop carefully to avoid running out of cash and food before the end of the month.
Also, look for other monthly expenses you can cut, such as the cost of wireless service and utilities.
GENERATE EXTRA CASH
Another good way to prepare your finances for the holiday spending season is to make extra money. You might be able to find a seasonal job because there
will be increased demand for workers during the holidays, according to Brie Reynolds, senior career specialist for FlexJobs and Remote.co.
Openings aren’t limited to retail or customer service positions, either. They range from administrative and marketing to arts and entertainment. To find a position, Reynolds recommended starting your search as soon as possible and using keywords such as “seasonal,” “holiday” or “temporary” on job search sites.
If getting a second job doesn’t fit in your schedule, you can generate income from home in your spare time by taking online surveys.
“Online surveys are a quick and painless way to earn $25 extra each month in the form of Amazon gift cards, iTunes gift cards, and even cash in with some survey companies,” said Peach. He recommended Harris Poll Online and Opinion Outpost.
MAKE A GIFT LIST NOW
Don’t wait until December rolls around to figure out which people you want to give gifts to and what you want to buy them.
“There are two kinds of gifting strategies: You gift small items to a big group of recipients, or you gift bigger purchases to a small number of people,” said consumer expert Andrea Woroch. “When you fail to have a game plan, these strategies will often combine to the detriment of your budget.” You’ll end up buying expensive items for a lot of people.
Review the amount you can afford to spend and create a shopping list based on the people you want to buy gifts for along with a budget for each person, said Woroch. Creating this list as soon as possible will help you take advantage of other money-saving strategies.
GET AHEAD BY RESEARCHING PRICES
If you have a gift list, start researching prices for items on your list. This will help make you a smarter shopper this season, said Woroch.
“Retailers are notorious for inflating original prices during the holidays to make a discount look like a better value,” she said. “But if you’ve done your research, you can separate the good deals from the duds during popular sale events such as Black Friday and Cyber Monday.” It will help ensure you get the best prices for the items on your list.
Use sites such as PriceGrabber.com and NexTag.com to compare prices on a range of products. Also, check the websites of the retailers that carry the products you plan to buy to get an idea of how much the items are selling for now.
START SHOPPING EARLY
Not only should you start checking prices for gifts on your list now, but you should also start buying some items.
“Picking up a few gifts ahead of the holiday season will help you avoid the financial strain you may otherwise feel in December when buying multiple gifts at once,” said Woroch.
Plus, you can find deals on several items before the big shopping events, such as Black Friday. For example, October is a great time to buy digital cameras, said Kyle James, founder of Rather-Be-Shopping.com. Manufacturers tend to release new models before Christmas, so you can find deals on older models, he added.
If someone on your list wants a bicycle, October is also a good month to buy one because prices drop on older models after new models are released in September, said James. Some of the other best things to buy in October are jeans and camping gear.
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