In addition to being a time of giving and celebration, the holidays are a time of expenses. And in the midst of a tough economy, Americans may find it even more difficult to meet the countless costs that spring up this time of year.
Still, there are ways you can enjoy the season and all its trappings while still following a realistic holiday budget. Follow these tips to ensure you don't end up on a sleigh ride to bankruptcy this year.
1. Set the course for spending
You may not have as much you'd like to spend on gifts, but that's OK. As the old saying goes: It's the thought that counts. So know how much you can spend and stick to that figure.
Remember that gift-giving is only part of the extra money you'll spend this holiday season. There are other things to consider, such as travel, food, entertainment and random holiday cheer items such as greeting cards and decorations. Include them all as you make your spending plan.
2. Find places to trim
There are myriad ways to supplement your holiday budget and save extra dollars. Cutting back on dining out and diverting your discretionary spending to holiday spending (if you aren't already) are two great places to start. Also look for ways to save on the small things: electronic Christmas cards can be as charming as a paper card--and they are free.
3. Consider an extra holiday job
As holiday shopping picks up, most retail stores bring on temporary employees. An extra 10 or 15 hours of work per month can help significantly strengthen your holiday budget. Or, if you'd prefer to work in a true holiday environment, look for work at a Christmas tree farm or holiday park.
If you don't have the time or will for a new job, consider generating new income by collecting old household items for an online garage sale on eBay or Craigslist.
4. Make a list – and check it three times
Jot down a list of everyone you buy gifts for. Is there a chance there are two or three names (or maybe more?) that you can eliminate from that list? It may sound terrible at first, but often you'll discover that you and some friends may exchange gifts out of habit and that, with a little explanation, they may be happy to save on the gift to you as well. Propose spending time with them on a cheap lunch date instead to show you still care.
5. Look for specific deals – and jump on them
If you've created a detailed budget and know what gifts you want to buy, Black Friday is your friend. A little research (dig through the newspaper ads on Thanksgiving) can help you save substantially on those gifts. Sure, you'll have to battle crowds at the mall, but your sanity will heal faster than a bruise to your wallet.
Also consider watching for gifts on daily discount web deals, such as Groupon and Living Social--just be sure they don't tempt you into buying too many gifts for yourself.
6. Protect your wallet
Not from pick-pockets, but from the urge to overspend. You are most likely to do this one of two ways: by using credit too freely or by shopping carelessly.
Many people get into the trap of using credit to supplement their holiday budget. That's fine, if you know you'll pay the balance in a month or two. Otherwise, running up credit only means you will spend more than the sticker price in interest and fees.
Shopping carelessly often occurs when you can't focus on the task at hand. If your mind is on something else, or if you're simply exhausted and just want to get your shopping done, you're liable to buy an overpriced gift just to end the misery.
7. Shopping's done? Time to budget for next year
If you're like most Americans, you did not save in preparation for this holiday season. But you can change your habits next year by opening a new savings account for the purpose now.
Check to see if your bank offers a Christmas club account, which will automatically transfer a predetermined amount of money from your primary account into this special savings account. You cannot withdraw funds from the account without incurring a penalty, thus keeping you from accessing those funds before the holidays.
If your financial institution doesn't offer a Christmas club, you can create your own by opening a savings account and automatically transferring funds to that account each month. But in that case, it's on you to make sure early withdrawals don't ruin next year's saving plan.