October 30 2010|05.00 AM UTC

Samantha Eckles

20 Tips to Help Stay Within Your Holiday Budget

Category: Personal FinanceTags: , , , ,

We admit it: much advice about holiday shopping is rather simplistic and preachy. Like diet and exercise, holiday shopping is something we all feel comfortable bleating about – even if we aren’t following best practices ourselves. But with so much money at stake, it never hurts to refresh on the fundamentals of intelligent, budgeted holiday shopping. Keep these 20 tips in mind and you’ll escape the holidays without a heart attack-inducing credit card bill in January.

1) Decide who you truly need/want to buy gifts for

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Most budget tip lists begin by telling you to develop a budget. While this is certainly sensible, it is actually not the best place to start. Simply developing “a budget” says nothing about whom and for how many people you are buying gifts. Without scrutinizing the gift list, people often wind up spending excess money buying for those they don’t really need or want to buy for. Consider the big picture. Must you buy gifts for distant relatives you rarely see or talk to? One could argue that buying “yet another cologne set” for little Joey in Iowa does nothing to deepen family bonds while adding extra cost to your holiday bill. So before creating a budget, create a list of who you are buying gifts for.

2) Decide how much to spend on each person

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Simply “creating a budget” suggests that one should sit down with a notebook and adopt whatever random number pops into their head as the amount they’ll spend on holiday gifts. This bog-standard advice is too vague to be helpful. Far more useful is to decide how much you will spend on each person on your gift list. Roughly speaking, you should decide how much to spend on each person based on your closeness with them and your personal judgment. Simply deciding to set personalized gift amounts in this manner will result in spending far less than fulfilling some subjective round number you dreamed up.

3) Time your shopping

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A common holiday shopping tip is doing it all at once to minimize headaches and “get it over with.” Sensible as this sounds, it is actually not the smartest way to go. The reason, very simply, is that retailers hold sales in various product categories in the weeks leading up to Christmas. One week might produce great deals on clothing, while the next proves to be ideal for electronics, and so on. Therefore, trekking all over creation with cash in both hands prevents you from reaping the big-time savings. Instead, keep your eye on sales fliers and decide to tackle all holiday shopping in a certain category (say, electronics) on days when they are least expensive. It takes more patience, but you’ll save more money.

4) Recall last year’s bill

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If you’re like most people, last year’s holiday bills are replete with waste, excess and the overall feeling that no real game plan or discretion was used. Rather than pushing this unpleasant feeling out of your mind, reflect on it. This is more of a psychological trick than a financial one, but it’s no less important. Without burning motivation to do things differently this year, you might just nod your head to these “obvious” tips and go right on doing the same things you did before. As the saying goes, “what got you here wont get you there.”

5) Inquire about discounts

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Many people fail to realize they are eligible for discounts with all kinds of retailers. Students, for instance, can get discounts on laptop computers, MP3 players, and sometimes even furniture. Senior citizens usually can get discounts at retailers of all kinds. If you yourself qualify for these discounts, great! By all means, take advantage of them. But don’t give up just because you aren’t a student or a senior. If you’re a parent, there’s no shame in sending your son or daughter into BestBuy with cash to buy gifts with their discounts. At the end of the day, it all comes down to money in your pocket vs. the store’s.

6) Count non-gift costs

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It should go without saying that gift costs are not simply the prices of the gifts themselves. There’s also wrapping paper, greeting cards, decorations, supplies for any parties you may be holding or assisting with, etc. Left unchecked, these ancillary costs can add a lot of heft to your holiday bills, and they should be kept in mind when deciding on gift budgets.

7) Don’t go into debt

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Notice our choice of words. Rather than the kinder, gentler “be careful with credit cards”, we came right out and said “don’t go into debt.” Why? Very simply, buying holiday gifts is about expressing generosity and kindness to friends and family members. This is all well and good – no one can begrudge you for wishing to give these treasured people things they’ll enjoy. That being said, gift giving is not an obligation. If you truly cannot buy gifts without spending money you don’t have, there is no shame whatsoever in buying cheap or not buying at all. No one worth buying gifts for expects you to sacrifice financial stability to participate in holiday gift giving.

8) Use cash

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Something about taking money out of our wallets and handing it over to a cashier makes us think about what we’re spending. In contrast, swiping plastic feels the same whether you’re spending $5 or $500. It’s extremely passive. To ensure that you adhere to the budgets created in tip #2, withdraw the exact cash amount you vowed to spend on the same day you vowed to spend it (per tip #3.) This way, using only cash – and avoiding debt – becomes a reality, rather than an abstract platitude.

9) Shop online

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The only exception to the “use cash” rule regards online purchases. Websites like Amazon and eBay often offer savings that simply cannot be found in brick and mortar stores, and you should take advantage of these when possible. However, we still advise that you use only debit cards to avoid spending anything beyond what you currently possess. Much as we advised earlier, try to batch these online purchases together so they can all be done at the same time and forgotten about thereafter.

10) Don’t get suckered into buying needless warranties

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One of the biggest sinkholes of lost holiday spending money is unnecessary warranties. Buyers of new TV sets, MP3 players, exercise equipment and countless other big-ticket items are brow-beaten into purchasing warranties by overzealous salespeople, but here’s the rub: Nine times out of ten, the price of these warranties is roughly equivalent to the price of a repair in the event one is needed. Keeping this in mind, it makes little sense to buy now what may in fact never need to be purchased at all. Just buy the gift and let the recipient cross the repair bridge if and when they get to it.

11) Don’t wait

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Don’t confuse our earlier suggestion to buy gifts when they’re on sale as a blanket excuse to procrastinate. As you’ve undoubtedly heard before, procrastinating is the worst way to buy holiday gifts. In addition to the stress and anxiety, you will also find yourself competing with the most people for the least amount of desirable gifts. Don’t let yourself be reduced to picking over the scrap heap for the gifts you want. Formulate a plan of attack and execute it on your schedule, not the retailer’s or other shoppers.

12) Simplify holiday parties

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Untold sums are squandered each year on elaborate holiday parties with enough grandiose decorations to make one of Santa’s elves blush. Glamorous as this may look, it actually misses the entire point of holiday get togethers. Beneath all the glittering lights and tinsel, holiday parties allow relatives close and distant to catch up. Some may not have even seen each other since the last Christmas party. For this reason, it is quite acceptable (and if you ask us, preferable) to create a comfortable atmosphere, serve some favorite refreshments and enjoy the evening without feeling compelled to drop hundreds of dollars on decorative bells and whistles. No one will think any less of you or the party you threw.

13) Resist impulse buying

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Retail stores are laid out by extremely intelligent people. They realize that some consumers show up with a list and sincerely intend to buy only the items on it. Therefore, merchandise is displayed in ways that cry out to our impulses, demanding that we make exceptions and buy “just a few things” that we didn’t plan on. The only way to resist this kind of impulsive buying is by deciding in advance that you will not succumb to it. As you drive to the store, consciously think about the fact that stores want you to buy extra items – and resolve that you are going to stay the course. Crafty as these stores can be, your spending is ultimately controlled by you.

14) Beware of store credit cards

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We advised you earlier to avoid debt completely, but store credit cards deserve their own warning. Yes, it’s awfully enticing to imagine getting 10%-30% or more off what you’re buying today, but the ramifications of getting store credit go beyond today. Every new credit card you get affects your credit score. Store credit cards are also notoriously strict about late fees, and interest rates are generally higher than standard cards like Visa or American Express. Before signing up, consider why a store like Target or Kohls could consistently discount its merchandise and still turn a profit on these credit cards. It’s all in the fees, penalties and interest, none of which are likely to be on your mind in a rush of holiday shopping.

15) Beware of no down payment offers that are too good to be true

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Another timeless tactic of retail salespeople are “no down payment” offers and installment plans. Like so many financial offers, it sounds great right now. Get your gift now and don’t think about it until payments come due in six months. What could be better? Unfortunately, the messy reality is more complicated. Just like store credit cards, these payment plans have strings attached. Failure to make on-time payments (sometimes even by a single day) can trigger astronomical interest rate hikes – not just on the one missed payment period, but on the entire duration of the plan! Nobody needs these headaches during the holidays. Instead, bear in mind what we said in tip #7. Holiday gift giving is appropriate and gratifying but there is nothing compelling you to bend over backwards in the process.

16) Shop alone

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Believe it or not, shopping alone is an under-appreciated way of ensuring that you spend less. One explanation is that shopping with someone else boosts your desire to “one-up” them by spending more, or impress them with the extravagant gifts you are willing to buy. Another is simply that having someone tag along distracts you from the task at hand, making you lackadaisical and complacent instead of focused and determined. Whatever the reason, it’s just not smart to shop in a group or with others. Go it alone.

17) Buy some gifts after Christmas

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Think long and hard and you can probably remember numerous occasions where you exchanged gifts with someone days or weeks after Christmas. Whether you live far away, have conflicting travel plans or just don’t get a chance to meet up as early as you’d hoped, this creates an opportunity for you to intelligently delay gift buying. Instead of rushing to buy for people you may not even see, wait until it is assured that you will. If Aunt Suzie rolls into town after all, scoop up some gift certificates to her favorite store and a greeting card. If nobody hears from her, consider it money saved.

18) Keep your receipts

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As often as this advice is repeated, it is still astounding how many people toss receipts to the gifts they buy. For myriad reasons (defective merchandise, wrong sizes, or just general dissatisfaction), stores are flooded in the days following Christmas with returns and exchanges. Don’t get stuck with something just because you couldn’t be bothered to tuck away the receipt in a safe place.

19) Hunt for promo codes

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More online retailers than ever are offering promo codes that you enter in at checkout. Before placing any orders, Google around to see if your retailer of choice has any promo codes available. A few minutes of searching could equate to 10%-30% off your order or more (depending on the promo code), which is literally as good as found money.

20) Ask about free gift wrapping

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Most retailers offer free gift wrapping during late November and throughout December – but only if you ask for it. Generally speaking, clothes, candles, and certain electronics can be gift wrapped by the retailer free of charge, saving you both time and money on doing the job yourself. Do yourself a favor and speak up at the checkout counter, as busy clerks are sometimes reluctant to mention this service and create more work for themselves.

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{ 7 comments… read them below or add one }

ShoestringShopper November 11, 2009 at 7:20 pm

Wow! I always check around for tips on saving at this time of year and I have to say yours are the best I’ve seen so far. Except, how many people can afford big ticket items this year? I for one won’t be worrying about whether or not to buy a warranty. I’m at the bottom of the shopping scale which is why I got cheap but good cell phones at Walmart for 4 people on my list including three teens and my grandfather who has been cell phone resistant. But I know he’ll get a kick out of it. The phones are all Tracfone Motorola phones which came with one bonus minute for every minute I bought. Altogether I spent $140 on phones and minutes. Can’t beat that for shopping on a shoestring.


Anon October 30, 2010 at 4:21 pm

Just a heads up, Best Buy does not offer student discounts.


Burl October 30, 2010 at 6:34 pm

great tips and useful ones too!


Sean Browne November 3, 2010 at 11:21 am

Great post!!! There are a lot of tips to help with this holiday season on how to save money without going into debt. every person who is doing some holiday shopping should read this at least once.


Michael Brown November 8, 2010 at 5:14 pm

Thanks for putting this together. I especially appreciate the suggestions on debt…Don’t go there! Some retailers make their entire year profit on the sales for Christmas. To say nothing of the fact that the big retailers figured out years ago that revolving credit was paying them much more than the profits on things that they sold.


Christian V November 10, 2010 at 11:35 am

nice tipz, thanks


donald December 9, 2010 at 9:04 am

i’m surprised no mention of metro pcs, great buy’s on cellular service


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