By Laura Roler, Military Saves Associate, AFC ® Candidate, FINRA Military Spouse Fellow
The holidays are fast approaching, and you may already be spending money and buying gifts to prepare. Before you spend too much money, take a moment to watch for these six warning signs that you may be spending too much money this holiday season.
#1: You Don’t Have a Budget
How much have you saved for your holiday spending? How much can you afford to spend without going into debt? To start the holiday shopping season right, begin with these numbers. If you haven't saved, you may still be able to find the funds this year, but it is also a great time to begin planning for next year by saving automatically into a holiday fund. Be realistic about how much you will spend and who and what you will be spending on when creating your budget. If it isn't something you can stick to, then it is time to adjust your numbers, your priorities, or both.
#2: You Don’t Have a List
A list is different from a budget. Once you know how much you have to spend, make a list of who you will be buying for, and decide how much you would like to spend on each person. Determine this before you go shopping and stick to it! Spending just a few dollars more per person could put you in the position of running out of money, or winding up in debt.
#3: You’re Putting Items on Credit
There are appropriate occasions to use credit cards, but it can be difficult to use them responsibly. The holiday season occurs every year—don't make going into debt an annual tradition! Buying with credit allows you to spend money you don't have, exceed your holiday budget, and adds interest charges to those good deals you think you are getting when purchasing gifts, making them cost more! To avoid overspending, stick to your budget, save your credit cards, and use the money you have saved for your holiday purchases. Leave the credit cards at home!
#4: You Can’t Resist a Holiday Sale
Don't get me wrong, there are some good deals out there during the holidays! However, holiday sales can sometimes offer deals that are difficult to resist on things you didn't plan to buy (BOGO deals, special discounts if you spend a certain amount, etc.), and you may find yourself spending much more than you planned. If you can't resist the lure of Black Friday or other sales, be a smart Saver and plan your shopping trip ahead of time. Decide the date, time, and destination of your shopping trip, stick to your list and your budget, and limit your purchases to those you already planned to make.
#5: You’re Impulse Buying
Buying items not on your list is a surefire way to blow your holiday budget. By creating and following a holiday budget and shopping list, shopping with a clear goal in mind, and avoiding unplanned shopping detours and window shopping, you can keep your saving and spending on track. Shop deliberately, not impulsively!
#6: You Find Yourself Shopping Online Often
The internet can be a useful way to do your holiday shopping, but it is also chock full of some of the dangers listed above, as well as many others! Buying online usually requires a credit card, and website retailers know just how to market those holiday sales to encourage you to fill your cart with unplanned purchases. And remember, if you are paying shipping fees on top of item prices, those deals may not be such a good deal after all! If you do plan to do your holiday shopping online, do just that: plan your purchases, stay within your budget, and follow your list!
Shop like a Saver! Here's a to-do list for holiday shopping:
1. Save for the holidays
2. Create your budget
2. Make your shopping list
3. Plan your shopping trip
4. Use money you saved for your purchases, rather than credit
5. Save your receipts
6. Once your shopping is done, reevaluate your holiday savings and spending strategy to determine if they worked for you. If not, you can always try again for next year!
Set a goal. Make a plan. Save automatically. Military Saves can help you stay on track this holiday season. Just take the Military Saves Pledge and have a happy holiday season!