Be a Nerd With Holiday Budget
It’s that time of year—so plan a shopping strategy and stick to it this holiday shopping season if you want to avoid a financial hangover.
That’s the advice from Los Angeles-based ByDesign Financial Solutions, a non-profit organization that operates the Consumer Credit Counseling Service of Los Angeles.
“The time to map a strategy and begin shopping for the holidays is now,” says Richard Pittman, certified credit counselor and spokesperson for ByDesign. “Without a game plan, shoppers are asking for last-minute stress and a shock in January when the credit card bills roll in.”
ByDesign’s shopping and budgeting tips come as Thanksgiving revelers turn from their turkey to the shopping scne, where products and sales pitches will bring a whole new set of temptations.
ByDesign adopted a “nerd” theme—a word that is typically used to describe someone who worries too much to have fun—for its annual message of advice for holiday shoppers.
“Budgeting for the holidays may sound nerdy, but those who find the best deals and the most appropriate gifts have the most fun shopping and face the New Year free of unnecessary debt,” said Pittman. “Although the average person is expected to spend nearly $800 on holiday spending, that number can easily soar.”
Here are ByDesign’s “6 Tips for Holiday Shopping Like a Nerd:”
• Set a Limit
Many financial experts suggest that consumers set aside 2% of their net annual income for the holidays. If you already have debt, however, ByDesign suggests setting your limit to less than the net income earned in three working days. That means you should figure your pay—after taxes—for three days and hold your holiday spending to that amount. The goal is to choose an amount that you can realistically pay off by the end of December—or January, at the latest. Keep in mind that the average consumer who buys on credit takes four years to pay off the debt with interest.
• Create a Written Budget.
Make up a total holiday budget, listing how much you can spend on the categories of gifts, travel and entertainment for the holidays. The gift category should include a list of all the people for whom you plan to buy gifts, including friends, family, and coworkers. The travel category should include airfare, rental cars, tips, hotel, gas, and other costs for any trip you might be planning. The entertainment category covers items such as food, cards, postage, wrapping paper, decorations. and seasonal clothing. You can download free budgeting forms by visiting www.bydesignsolutions.org/budgets on the Internet.
• Get Creative.
Tap your creativity in order to meet a limited budget and have the most meaningful holiday possible. Most of us do this best when we have plenty of time. Make sure to think about the needs and likes of the gift recipient when choosing gifts. If a coworker has commented favorably on a plant you brought into the office, take a clipping of it right now, sprout it in water, and plant it in an attractive, inexpensive container and tie a bright ribbon around it.
• Shop With Purpose.
Don’t expect holiday shopping to be fun. Control your spending—you’re on a mission. Seek meaningful gifts within your budget, keeping in mind that it takes work. Avoid spending on yourself. The average shopper makes the mistake of spending an additional $100 on personal purchases.
• Pay With Cash—Or Use Only One Credit Card
Cash is king, but if you must use a credit card, take only the card with the lowest interest rate with you when shopping. Avoid special credit-card offers from department stores or your card issuer—such as skipping a month of payments or not paying on an item for six months.
• Keep Track of Your Spending.
Keep a copy of your written budget with you, and refer to it while you shop—not after you return home in the evening and add up the day’s purchases. Keeping track as you shop will help you avoid overspending or going over your credit limit.
“If you follow the above steps, you’ll, be a nerd,” says Pittman, “but a financially well-off nerd.”
