The holidays are upon us! As I mentioned in my last post, we’ve been inundated with ads for weeks or months by now. There are hundreds of sales and special offers enticing us to buy. Do you ever find yourself spending more than planned even after you take advantage of the many sales opportunities? According to a recent survey from Elevate’s Center for the New Middle Class, you’re not alone.
Almost 40 percent of American consumers reported overspending on the holidays in 2016. Plus, debt counseling companies see a 25 percent increase in customers looking for support in January and February. But it doesn’t have to be this way. We can learn from our mistakes, and make new decisions moving forward.
What the data says about shopping and chasing sales
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39 percent of consumers spend more than planned during the holidays
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Those who went over budget spend about 15 percent more than planned
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86 percent of shoppers use some kind of savings tactic, like shopping sales or using coupons
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Consumers were 45 percent more likely to go over budget if they chased sales
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People who use coupons were 22 percent more likely to overspend
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Couponers who didn’t set a budget were 76 percent more likely to overspend than those who did budget
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Using a credit or debt card made people 38 percent more likely to overspend than those who used cash
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58 percent of holiday spending goes towards gifts, while the rest accounts for travel, food, celebrations, etc.
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Those who didn’t plan ahead spend 125 percent (!) more than those who created and stuck to a plan
What you can do to avoid overspending at the holidays
Create a budget
I wrote about this last week, but it’s so key to create a spending budget at the holidays. Make sure you’re also accounting for any travel (or celebrating) that you will have to do. This will give you a framework to stay within. Keep your budget number with you and write down the amount every time you buy a gift. That way, you’ll always be aware of how much you’ve spent and how much spending you have left.
Set spending limits
Once you’ve created your budget, set a cap on how much you can spend per person or per gift. Keep track of your spending as you go, and stick to your limits. If you know you don’t want to spend more than $20 per person (except for very special people), don’t even look at items that cost more than that. It can be tempting to spend more, but remind yourself of your parameters and keep yourself in line.
Plan for unexpected costs
Things happen. If your car breaks down or something else goes wrong around the holidays, it only adds stress to you and your budget. It helps to plan for these types of expenses. Make it a long-term goal to build up your emergency savings account. This fund will protect you when unexpected costs arise. How does that help you around the holidays? It won’t force you to pull money from your gift budget, so you won’t have to deviate from your plans!
Avoid savings traps
Have you ever gone to the store looking for one item, but then there’s a sale if you buy two or more? So then you end up buying more (and therefore spending more) than you intended? Me too! That’s called a “savings trap”. It seems like you’re saving money but you’re actually spending more than you would have otherwise. Once you have your gift list and/or budget set, don’t deviate, even if there is a sale.
Use cash
If you tend to overspend even when you have a budget, consider using cash only. Once you set a spending limit for yourself, take that amount out of your bank account. Carry that with you when doing your holiday shopping, and once it’s gone, you’re done! Consider leaving your credit cards at home so you aren’t tempted to keep shopping.
How do you typically plan (or not) around the holidays? How does it turn out for you? Share in the comments!
Maggie Germano
Certified Financial Education Instructor. Feminist and financial coach for women. Founder of Money Circle.