Responsible Holiday Spending

The holiday season is almost upon us and while Christmas is definitely a wonderful opportunity to spend time with friends and family, it’s also a time when a person’s “jolly spending” can create financial hardships for the months that follow.  Christmas spending is one of the biggest reasons people find themselves buried in credit card debt.  People spend freely on gifts for friends, family or even themselves at the end of the year and then are obligated to spend the next 12 months paying for all those gifts.

With each passing year, the holidays seem to increase both our spending and stress levels.  Very few people plan their holiday shopping on what they can afford, but rather on what they feel others expect from them.  Of course, in our 21^st century consumer-driven society, holiday spending only magnifies the underlying lack of financial self-restraint that propels our lifestyles on an on-going basis.

This year, despite a slumping housing market, credit concerns and the potential for a full-blown economic recession, consumers are still planning to increase their holiday spending.  According to the National Retail Federation, the average U.S. consumer will spend $923.36 on holiday-related shopping for an incredible total of $474.5 billion this holiday season, an increase of 4% over last year.

While it’s great to be able to buy gifts for people you care for, if you have to go deep into debt to be able to enjoy the Christmas season, then it’s time to rethink your priorities. The holidays should be a time to take a step back and be thankful for what you do have rather than a hyper-intensive spending spree that only magnifies our society’s sense of entitlement.

Here are a few suggestions for enjoying the holidays in a financially responsible way:

Plan Ahead

The first step in creating a holiday budget is to make a list of the people that you would like to buy a gift for.  As with preparing any budget there will probably be two segments to this list, the “need to’s” and the “want to’s”.  Some people feel they need to buy gifts for almost everyone they know.  While that might be nice to do, the financial reality may not make it possible. 

Set A Budget

Now that you have created a list of whom you’re going to buy for, the next big question is what you’re going to buy each of them.  Try to come up with multiple ideas/options for each person.  Once you have your holiday list, look at each item and make an estimate of each item’s cost.  Then add up each item on your list to get your initial estimate of what your holiday shopping is going to cost.

Reassess Your Budget

Before you rush out to the mall to join the masses for your much-anticipated holiday spending spree, you first need to reassess your budgeted spending.  Just because you now have an idea of how much the holiday’s are going to cost doesn’t necessarily mean you can afford that amount.  Take a serious look at your financial situation.  Will you need to go into debt to afford those gifts?  There is a good chance that your initial estimate may not fit your current budget. If it is more than you can afford to spend, it’s time to make adjustments to the list. Taking a critical look through your shopping list can help you reassess your overall spending levels. Maybe you can choose less expensive gifts or fewer gifts or even substitute Christmas cards or baked goods instead of buying a gift. 

Shop Intelligently

You’ve now reached the most important stage of the process – executing on your budget.  Too many people have good intentions, but then procrastinate and end up trying to shop at the last minute and overpaying for everything.  So once you have finalized your budget, begin looking for deals immediately.  Just getting your holiday shopping done early can help relieve much of the stress people feel at Christmas time.

Although you now know what you’re going to buy, that doesn’t mean you should rush out haphazardly to buy it.  In the internet age that we live in, just spending a few minutes researching prices can save you money.  Price comparison sites like Pricegrabber, Shopzilla or Nextag can help you find the cheapest prices on most items.  Doing your holiday shopping online has several benefits as well.  1) You avoid the crowds.  2) You can generally get a better price.  3) Many online retailers offer special incentives like free shipping during the Christmas season to motivate shoppers to buy online. 

While many people seem to go to excess during the holidays, it’s important to remember that Christmas is not about giving or receiving gifts.  It’s definitely not about your children’s entitlement to a “big Christmas” or your obligation to give everyone you happen to know a gift.  Christmas is supposed to remind us of what God has given to us.  So don’t let a lack of financial responsibility this holiday season take away from the joy, happiness and thankfulness that you should experience.