By Claudia Mollerup-Madsen
Many of you may have already started your holiday shopping after Thanksgiving by participating in Black Friday and Cyber Monday sales. Retailers not only offer Black Friday deals, but many offer good deals through December. While shopping holiday sales is a smart way to save money, ensure you are equipped with a plan so that you are not in massive amounts of debt when the holiday season is over.
Set a budget
Discover credit card found that 25 percent of us are planning to spend more on gifts this year than last year. Before you become a statistic and spend too much, set a budget so you are not tempted to overspend. Decide which friends and family will be getting which gift, then set a budget and stick to it. With every purchase, subtract from it as you spend money; that way, you will see how much you have left to spend, before you blow your budget. Even if you have already started your holiday shopping, it’s never too late to organize your thoughts and set a budget.
It can be expensive to purchase gifts for all of your friends and family. One way to help stay budget savvy is to draw names or play the Secret Santa games with your friends or family. Make sure each of those playing or drawing names stays within a realistically pre-determined budget. Another way to stick to your holiday spending plan is to channel your inner DIY-self by making presents. Homemade salsa, candles, coaster, picture frames, hot chocolate, potpourri, the sky is the limit in making your own gifts.
Use your bonus
Will you be getting a bonus from your employer this holiday season? If so, utilizing your bonus to purchase gifts without spending money from your regular paycheck is a clever way not to overspend. While an end of year bonus can feel like a gift, ensure you use it wisely. Purchasing gifts through your bonus is an intelligent way to avoid extra debt, while also ensuring that your regular paychecks can be used for bills and any unforeseen expenses.
Be smart with credit
38 percent of consumers say they will use their credit card this year for holiday purchases. If your purchases are within your planned budget, credit cards can be safe and convenient. However, if you are using your credit to pile up the gifts and are not staying with your gifting plans, you will likely regret your spending choices come January when the bill is due. A holiday hangover is not a wise way to start the new year.
Shopping for friends and family can be a large part of the holiday fun. But please be smart and thoughtful. Ensure you are sticking to your proposed budget, using your bonus wisely, and not getting in over your head with credit card debt. By being creative and attentive to your finances, the holidays will be joyful and without a headache in January.
Claudia Mollerup-Madsen is Vice President and a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.