Set a realistic holiday budget by prioritizing the gifts that matter most instead of trying to buy everything on your wish list.
Be cautious about opening store credit cards for discounts, especially if you can't pay off the balance right away.
Talk with loved ones about gift-giving expectations ahead of time and remember that meaningful gifts don't have to be expensive.
The holidays are a time for celebrating, giving, and spending time with loved ones. But between gifts, decorations, travel, and festive gatherings, the costs can add up quickly.
And with everyday expenses already putting pressure on many household budgets, holiday shopping can make it even harder to stay financially on track.
The good news is that enjoying the season doesn't have to mean overspending or carrying a mountain of credit card debt into the new year. With a little planning and some smart spending habits, consumers can make the most of the holidays without putting their finances on the back burner.
ConsumerAffairs spoke with Greg Gagne, ChFC, founding member of Affinity Investment Group and a 27-year MDRT member, to get practical advice on setting a holiday budget, navigating seasonal sales, and keeping spending under control.
Avoiding common mistakes
One of the most common mistakes consumers make with holiday shopping involves a budget. Whether that’s not sticking to the budget, or not setting a realistic budget, it’s one of the easiest ways to overspend during the holidays.
“A common issue is underestimating the cost associated with the items consumers plan to buy,” Gagne said.
“Budgets are fine as a guideline, but perhaps reverse engineering the spend is a better approach. What are the top three gifts the individual wants? If you can’t purchase all of them, identify the one you think is best as your gift and cross that against the ‘budget.’ Giving is not about the costs as much as the intent.”
Be mindful of store credit cards
Another easy way to get strapped with debt in the new year: store credit cards. Gagne warns consumers about immediately signing up for another credit card without thinking about the long-term implications.
“This one is a key!” Gagne said. “Be very careful about opening store credit cards to ‘save,’ because you may save a percentage of the purchase up front, but if you can’t then pay that balance when the bill comes, you will pay more than you saved.”
So, what should you do instead?
“Use one or two cards so you can best track the total expenses you are incurring while shopping,” Gagne said. “So many spring seasons are spent coaching clients how to get out of these small debts that when put together squeeze cash flow and cause a lot of interest to be paid!”
‘It’s the thought that counts’
We’ve all heard the saying countless times. But does it ring true? And how do you broach this topic with your loved ones?
Initiating conversations with family members and loved ones ahead of time can be the best way to go about it. This ensures that no one is surprised when it comes time to unwrap gifts, and everyone knows that the meaning is more important than the price tag.
And according to Gagne, the old adage rings true.
“Discuss boundaries before the holidays begin,” he said. “Gifts need not be expensive. A well thought-out, meaningful gift need not break the bank.”