6 Steps That Will Keep You From Blowing Your Holiday Budget

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Reasons You Keep Blowing Your Holiday Budget

By Maryalene LaPonsie

The National Retail Federation says you'll probably be $804 poorer after the 2014 holiday season wraps up. That's how much the industry group says consumers plan to spend this year. While the lion's share of that money goes to family, you also expect to spend $80 on friends and $26 on co-workers. Even Fido gets in on the action, with you pet lovers planning to spend $30 on your nonhuman companions. That's how much you plan to spend. What about the amount you actually spend?

Behavioral economist Hersh Shefrin says even though many of the holiday shoppers who take the time to write a budget, 36 percent of them,will overspend. And for the least accurate budgeters out there, Shefrin found they spent 30 percent more than planned. That means someone with a $804 holiday budget may end up spending $1,045 and end up with a week or two of ramen noodle dinners to make up the difference.

Step 1: Create a Budget

I'm going to go out on a limb here and say that many people probably don't even have a written budget for their holiday spending. Instead, they may have a hazy idea of what they can afford.

Let's be clear: A hazy idea is not a budget. Sit down (with your significant other if you share the bills) and write down your holiday budget. To do this, you need to include all these:
  • Brainstorm every gift you need to buy. A common mistake is leaving out all of the little gifts that can add up. I'm talking about the white elephant gift for the family party, the office Secret Santa exchange, and all the service workers you tip extra.
  • Write down all your holiday food expenses. Your normal grocery budget isn't likely to absorb things like the fixin's for a family feast or ingredients for dozens of cookies.
  • Assign a dollar amount to every line item. Every person and event needs a specific budgeted amount.
  • Add it all up and balance that against what you can afford. Once you get the total for everything, you may find you have to pare down spending for some people or eliminate others altogether.

Step 2: Get Creative

If you don't want to eliminate people from your gift list, it's time to get creative. What can you do that your family and friends could use or would like? In this case, we're talking about things that may cost more time than money.

Crafty folks have all sorts of options, from knitting scarves to creating photo scrapbooks. Even if you're not particularly crafty, you can find online instructions for inexpensive handmade gifts like these:

  • Baking mixes
  • Bath salts
  • Decorated bookmarks
  • Painted picture frames
  • Rice bag warmers
  • Coasters

Of course, don't overlook the gift of service or memories either. Your great uncle may not need another knickknack, but he might need someone to rake the lawn. Meanwhile, the best gift you may be able to give your grandma is to spend the afternoon with her. Every family is different, so review your list and try to identify which individuals could benefit from these types of gifts.

For gifts of time or service, create a decorative homemade gift certificate or coupon to place in a card.

Step 3: Inventory What You Have

Some are appalled at the idea of regifting, as if we're suppose to cherish for all eternity every knickknack we've received, but there's really no good reason to keep things you don't use or like.

Step 3 is about more than regifting, though. It's about looking through your house for anything that could be used to reduce your holiday budget. Maybe you went a little wild during the last Yankee Candle sale and have a stockpile of scented wax in the closet. Perhaps you have a gift certificate for a store at which you personally never shop but that sells perfectly good giftable items. Or maybe you can redeem credit card rewards points for gift cards or merchandise.

Depending on your family dynamics or the age of the recipient, you may even be able to gift gently used items. In fact, that may be the preferred way to find an item for white elephant exchanges and the like.

Whether you're regifting or wrapping up something you already have on hand, the key is to be sure you're not trying to shoehorn a random item onto your gift list. If there's no one who would truly appreciate and enjoy the item, set it aside and move on.

Step 4: Start Now

Waiting until the last minute is a surefire way to blow your budget. When you're shopping on Dec. 23, you tend to get a bit desperate and buy the first thing you see. Not only can starting early save you money in the store, it can also give you time to plan and make some homemade gifts. Apps might help you find the best deals.

Step 5: Track Your Money as You Spend It

It's not enough to simply have a budget; you also need to use it. And because holiday spending can add up so quickly, you need to be tracking your money in the moment.

While you could use an old-fashioned pen and paper to record purchases as you shop, a smartphone app may be the best way to ensure you'll always have your budget with you should you end up doing a little impulse buying. Goodbudget is one app that lets you set up 20 envelopes, and for the holidays you could use an envelope per person if your list is that small. Or try one of these holiday-specific spending apps:

Step 6: Cross Names Off Your List and Then Stop Shopping

This final step may be the most difficult for some. I know it is for me.

Once you have found the right gift, purchased it and crossed the person off your list, it's time to stop shopping for them. Stop looking at ads and stop browsing displays with that person in mind. When your entire list is complete, stop shopping altogether.

It can be tempting to keep going to the stores and shopping websites, especially when the TV and newspaper ads continually promise amazing savings. You almost feel as though you're missing out by not jumping on the deals. But unless you went under budget on your previous purchases, any more buying is liable to break your piggy bank.

If you do see something you absolutely must buy for someone already crossed off your list, return the item you already bought before spending more money.

13 Ways Black Friday 2014 Will Be Different
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6 Steps That Will Keep You From Blowing Your Holiday Budget
Last year, to build anticipation, a handful of retailers offered sneak peeks of their Black Friday ads several weeks before the official, complete debut. The strategy was successful at generating buzz, so expect to see far more retailers doing the same this year. A few stores to watch out for include MacMall, JCPenney (JCP) and Macy's (M), which leaked its sales via its Pinterest page.
Doorbuster deals are super-cheap, small-volume deals designed to get shoppers inside stores on Black Friday (although they frequently appear online as well). But because doorbusters are so limited in quantity, they tend to run out before most people set foot inside a store -- prompting many shoppers to just stay home. But, retailers want you in-store, in the hopes that you'll make some impulse purchases. Thus, we expect more retailers to offer a handful of "guaranteed" doorbuster deals this year, meaning eligible shoppers will receive wristbands or vouchers that guarantee that item, even if supplies run out (but you might have to wait a few weeks to receive it). Walmart (WMT) and Toys "R" Us did this to great success last year, and we expect to see more stores join in this year.
Despite petitions and protests from employees, retailers are looking to stock up on cashiers this Black Friday. While that means more people will have to work extra hours this Thanksgiving, it also means shoppers should experience shorter lines and wait times in-store.
It was around Black Friday last year that Target (TGT) experienced the first of these massive security hacks, but it wasn't the last; then came Neiman Marcus, eBay (EBAY), Home Depot (HD) and more. There's no denying 2014 has been the year of the hack. As a result, both retailers and consumers will be extra cautious this year, guarding their credit card info from would-be thieves. We recommend brushing up on a few crime prevention basics and limiting the amount of times you use your debit card in public.
Despite those financial security concerns, tap-to-pay services are at the forefront this year now that Apple (AAPL) has joined Google (GOOG) Wallet in the mobile payment industry. This may spur competing platforms and retailers to offer promotions or loyalty rewards when consumers pay via their smartphone. So, be on the lookout for promotions tied to mobile wallet purchases this year.
Good news for online shoppers: The United States Postal Service has slashed shipping costs for select businesses by up to 58 percent, which may inspire more shipping discounts from retailers. But before you celebrate, the new lower prices may backfire and cause the USPS to be overwhelmed this holiday season, especially as UPS (UPS) and FedEx (FDX) prepare to raise their rates. Your best bet -- shop early and keep an eye on those tracking numbers.
Previous-generation streaming devices tend to see the best deals on Black Friday, but this year the market is busier than ever, meaning we could see significant deals on current-generation set-top boxes. Among the newer models to look out for are Amazon's Fire TV and Sony's (SNE) PlayStation TV, both of which debuted at $99 and cater to gamers.
There's no denying the fact that mobile shopping is on the rise, and studies indicate that consumers tend to shop more from their mobiles on Black Friday. Retailers, however, aren't investing in their mobile infrastructure; so even though more people will turn to their smartphones and tablets after their turkey dinner, your experience online will be the same as last year.
This year we expect to see no-frills 4K TVs hit well below the $999 mark. Leading the charge will be budget TV manufacturer Seiki, which broke all deal records this summer with its $280 39-inch and $429 50-inch 4K TVs. These and other Seiki screens will hit similar price-lows this Black Friday, bringing 4K technology to the masses.
Bargain bin laptops have hit rock bottom. These simple, low-powered machines can't get any cheaper than prices we've seen in years past, which range from $178 to $200. As a result, this Black Friday you're going to see better discounts on mainstream machines, i.e. laptops with Intel's (INTC) current-generation Core processors and a respectable spec sheet. Deal prices on mainstream machines have been steadily dropping since April, with deals already flirting with the $350 range at the start of the fall season.
There was a time when brick-and-mortar stores refused to price match their online competitors, but as more consumers turned to e-commerce, big-name chains like Walmart and Best Buy changed their policies. This year, Toys R Us, Walmart, Best Buy and Target will be just a few big name stores that will take on Amazon. Expect to see many more price match announcements as Black Friday approaches. And as always, make sure to read the store guidelines as not everyone will offer no-questions-asked price matching.
Despite a crash in sales, tablets are still a hot commodity and expected to sit atop everyone's shopping list this November. With growing competition from Apple, Google and Microsoft (MSFT), it's a buyer's market, which means you can expect more tablet sales this year than there were in 2013. If you're strapped for cash, Windows tablets could offer the most savings since 50 percent of Windows tablet sales this year have been Editors' Choice deals.
Traditionally, the best toy deals appear in mid December, just before Santa's big debut. However, last Black Friday week saw more toy deals than ever before, beating out every week in December in terms of Editors' Choice deals. While it's hard to predict what might happen this year, one thing is certain: If you have toys on your shopping list, you won't want to sit out this Black Friday.
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