Are you cognizant of the emotional, visual, psychological advertisements of the holiday season? The National Retail Federation forecasts holiday retail sales to increase by 2.3 percent this year to $447.1 billion. While this is a moderate growth indicator from the previous years where 2008 was -3.4 percent and 2009 as 0.4 percent, it suggests consumers are overcoming the ripple effects of the recession.
In my opinion, it connotes consumers’ remembrance of the timeless wisdom of Benjamin Franklin: A penny saved is a penny earned. They thought twice before spending their hard-earned dollars. On the same token, a positive growth indicator means we are taking baby steps out of our cozy, safe homes and into the long, long lines at the department stores.
Advertisers know consumers will be armed with cash, debit cards, credit cards, and charge cards to purchase items during the holiday season. Advertisers are aware of the shift in mindset occurring during the holidays. It never fails. Entering any store during the holidays you will hear loud music, see enticing packages, along with smelling enchanting, aromatic perfumes in department stores. Consumers are lined up at the doors at 4:00am to catch the hottest deals, especially during Black Friday. And, once Black Friday is over Christmas is just around the corner. However, with unemployment at almost 10 percent, and credit remaining tight, I believe consumers will closely plan their spending.
Here are tips that will ease the emotional, visual, and psychological anxiety of holiday shopping along with tips to save money for the holidays:
1. Designate an allowance aligned with your financial goals. You can possibly have credit card debt, car loans, and/or other monthly expenses while simultaneously you are working towards paying off your credit card debt, saving for an emergency fund or a down payment for a home. A key question you should ask yourself is how will this allowance affect the results of my financial goals? Allocating money for holiday spending may or may not affect your financial circumstances. However, an allowance provides spending parameters. It also requires planning how the money will be spent.
2. Layaway. Layaway used to have a stigma. Not anymore. If you want to purchase merchandise but cannot pay the full price in cash, you can pay it over time until it’s paid in full. In the interim, the store will hold on to the merchandise. In addition, you avoid charging it on your credit card.
3. Make a list of the people you plan to buy gifts. Write down next to each person their very own spending limit. And, if you know what each person’s gift will be, then write it down next to their name. For example, if you write down your best friend, Lisa, next to her write “$50 Bath & Body Works.” This is the maximum amount you will spend on her gift. Your list should look something like this:
Name Amount Gift
Mom $50 Perfume
Dad $50 Sweater
Brother $50 Cologne
John $50 Wii games
Lisa $50 Bath&Body Works
Of course, $50 is not your limit for everyone. Keep in my mind, your total holiday budget includes the cost for gift wrapping.
Note: Even though, you set a budget, it doesn’t mean you have to spend your entire budget. It means you must not exceed your budget.
4.Compare prices. Avoid anchoring or clinging to the discounted or sales price. It should have no bearing to the decision you need to make regarding the merchandise. If your spending limit is $60, then the discounted price for the merchandise from $100 to $80, which is a 20 percent decrease from the original price and not 20 percent savings, is by no means a savings for you. As a matter of fact, it is $20 over your spending limit. As you make your rounds around the department stores you will frequently see signs marking down prices and indicating the savings for the corresponding merchandise. Remember, a discount is only a discount from your original spending limit. In addition, be aware of the “Buy One Get One Free” deals. It’s not a deal if you don’t need it. Therefore, make sure you shop around and compare prices. Also, check out the discount stores, such as Ross, TJ Maxx, Marshalls, etc. Go online to compare and search product prices. You can use websites such as Google Shopping, Amazon, eBay, DealTime, slickdeals, or Pricegrabber.
5.Getting a group of friends together to hold each other accountable. The idea is for each person to pair up with another member in the group to come up with an amount of money they would need to save for the holidays. I would encourage weekly chats or if you want to send a text message to each other to keep each other on track and accountable.
6.Try to save at least $5 a day. The best way to do this is to cut back on dining out for lunch and dinner. If you are strapped for cash, you will need to plan and save ahead of time to save up for the holidays. Put the money in a safe place in your home or if you happen to have a separate account just for the holidays.
7.Plan your meals ahead of time. You can keep an eye out on who is offering the best deals.
8.Exchange gifts. This will dramatically reduce costs. If you have a big family or group of friends you will just buy one gift. You can take it a step further and implement the Secret Santa. Write names down on a piece of paper and put them in a bowl. Everyone will have to pick out a name and that’s the person for who you will buy a gift.
9.Pay attention to your electricity bill. Depending on where you live you don’t have to turn on your heater or A/C. Living in GA I am cutting out on using the heater at night. During the day it’s been in the 80s and 70s. Warm enough to keep the windows open and at night they are cracked open to allow fresh air. The temperatures can get to high 40s during the night. Personally, I enjoy the cool air entering my home. Wearing warm clothes have been sufficed for me. Because I reduced the wasteful spending on electricity last month my bill dropped by $70! Can’t wait to see what will happen this month.
10.Shop 2-3 hours before you need to be somewhere. The idea is you will not have time to roam around the department stores or mall. You are on the go! Schedule your shopping before you have to be somewhere else. You are on a time schedule and your time cannot be wasted. This will work for grocery shopping, too. You only have enough time to pick up items or merchandise that you need or on your list.
Here’s my rational caveat on using credit cards during the holidays: I think it’s safe for me to say most people don’t like to lose money. When using your credit card to purchase items where you will have to pay more money due to interest is how you will lose more money. Ask yourself if you had cash would you pay for that particular merchandise? You might be surprise to learn that you would want to pay less if you had cash for it. Why? Because, I assume, you would not want to expend all of your cash.
Restrict yourself from devaluing your borrowed dollars. If you must use your credit card, put a post-it on the card with all the debt you owe and monthly payments while you are shopping as a reminder of the continuous debt you will incur if you use your credit card.
At times credit cards have rewards and it can make it easier to keep track of what you spent, however, make sure you pay it off before the end of the monthly cycle. Or, if you must use your credit card to purchase gifts, make sure you are able to pay it off within three months. I would rather know you are enjoying the holiday season instead of worrying about your credit card debt from the holiday season.
Remember, the holidays are truly about the times and memories shared among family and close friends.