Set limits on overall holiday spending: Decide how much you are really comfortable spending on gifts. A quick rule of thumb might be to keep your spending under 1.5 percent of your yearly gross income. For example, if your income is $30,000, try to keep your spending under $450. Set limits on how much you spend on food, decorations, travel, entertainment, holiday cards, etc. See the Holiday Spending Planner at http://extension.missouri.edu/wfes/documents/holidayspendingtips.pdf
How do I set these limits you ask? Make a list and stick to it! Your list should include all the people you need a gift(s) for, and their priority level. Then, by priority, assign each person a dollar amount. Hint – don’t exceed your limit just because you have more people than dollars. This is when you have to be creative and either 1. Eliminate people from your list, 2. Make them something instead of buying, 3. Give coupons for your time or talents 4. See part one. 5. Look at the holiday spending planner or Internet sites for gifts that stretch your dollars.
Once you have your list of people and amounts to spend, make a list of the possible gift(s) for each person and estimate the cost. Because actual purchase prices may vary, allow a 10-15% margin. Look online, in newspaper ads, catalogues, etc. to get an idea of the cost, and plan out your spending and shopping before you leave the house. To get the best prices, make use of bar code scanning phone apps or online price tracking tools such as CamelCamelCamel (http://camelcamelcamel.com/ tracks prices on Amazon).
Tips to stick to your limits:
- Use cash and bring only the amount of money you need or can afford to spend when shopping.
- Consider using the envelope method of planning. Create an envelope for each person with their name and the amount of money you have allocated to spend on them. Also do this for the limits you have set on food, decoration, etc. Don’t borrow from other envelopes unless the purchases have already been made for that person or category.
- Use cash, use cash, use cash. Bring only the amount you can afford to spend (this may give you leverage to negotiate more on purchases).
- Keep track of what you are spending. Each time you make a purchase, write down the price you paid. If you are using a credit card, make sure you are keeping a record of your spending for each person or category and subtract it from the amount you agreed to spend. It is easier to stay on track if your holiday spending planner comes shopping with you. There phone apps available to help you keep track of holiday spending. Most seem to have an upfront cost, but Santa’s Bag for IOS is free (although has in app purchase available).
- Set aside money each month for these end of year holiday expenses if you are not doing it yet. Set a limit in January for what you plan to spend at the end of the year and set aside 1/12 each month. If you have difficulty doing it yourself, consider using a special account at a bank or credit union that will help you save monthly and release the money towards the end of the year.