Every year, many start the holiday season with a shopping budget and a vow to stick to it. Yet year after year, after the gifts are unwrapped and the credit card bills and bank statements start to arrive, many are shocked at how much they really spent. Why is it so hard to stick to that perfectly crafted budget? Because it takes more than a preset number to stay within your limit: It takes a plan.
Have a Realistic Budget.
Your plan needs to start with a realistic budget. For example, if you typically spend more than $100 on each of your nieces and nephews, don't budget $25 per person this year. It is unlikely you are going to be able to cut your budget by 75 percent, and you could be setting yourself up for failure.
Make a List and Check it Twice.
Before you even set foot in the store, make a list of everyone you will buy for, what the budget is for each individual, and what gift you would like to give. Many of us are overwhelmed by the holiday shopping selections. It's easy to find a multitude of perfect gifts, and it's tempting to buy them all. However, if you a have a plan for each person, you can avoid the temptation.
Shopping takes time ... A lot of time. Start early in the holiday season and allow yourself the chance to make smart, budget-conscious purchases. You are more likely to overspend if you are shopping in a panic and need to find a gift—any gift—in a hurry.
Keep a List of All Purchases by Person.
Starting early means holiday shopping is spread out over weeks, or even months. Early purchases can easily be forgotten. Keep track of what you've bought for each person on your list.
Don't Buy Gifts that are Not Specifically for Someone on Your List.
Retailers put together fantastic gift sets that are perfect for teachers, co-workers, et cetera. Resist the temptation to pick up one or several of these, and make sure you can actually use the gift for someone on your list. Otherwise, you may end up with the perfect gift for yourself and short a gift or two for those left on your list.
It is harder to break your budget if you only make purchases with the cash you have in hand. You can easily talk yourself into spending a little more if you are using a credit or debit card. But, the little more spent on three, four, or five people quickly adds up.
A budget alone won't prevent you from overspending on holiday gifts this year. But a realistic budget, coupled with a plan and a little determination, could help you celebrate the holidays without experiencing sticker shock when the credit card bill arrives.
Written by Lisa Pohl, who has more than 15 years' experience as a tax professional with extensive corporate, litigation and public accounting experience. Her specialties include developing and implementing highly effective state, local and international tax strategies as well as managing a full range of Beene Garter Compliance Team initiatives to ensure timely and accurate filings of federal and state tax returns. Lisa earned her Bachelor of Business Administration in accounting from Baker College and her Juris Doctor from Thomas M. Cooley Law School.