Avoid These 5 Common Holiday Budget Pitfalls
According to a recent survey from the National Retail Federation, holiday shoppers are planning to spend an average of $805 on gifts this holiday season. The same survey found that shoppers plan to spend an average of $463 on family members. That's the highest this figure has ever been.
To make sure that you don't overspend this year -- no matter your target number -- be sure to create a holiday spending budget. That way, you're far less likely to find an unpleasant surprise when that credit card bill shows up in January.
Here are five things you shouldn't do when planning your holiday shopping budget.
1. Don't Let Guilt Break Your Budget
Maybe your sister-in-law buys your kids three gifts each. This doesn't mean that you have to do the same for hers. If your budget calls for just one gift for your in-laws' kids, stick to it. It's easy to let guilt lead you to overspending during the holidays. But don't feel like a scrooge because you aren't spending as much as your other relatives. If your budget is tight this year, don't break it in a misguided attempt to keep up with the spending of others.
2. Don't Add Last Minute Gifts to Your Shopping List
When making a holiday spending budget, you'll need to list the people for whom you want to buy a gift. As the season moves along, you might feel a temptation to start adding names. It's one thing if you forgot to place Aunt Sally on the list -- but it's another if you decide at the last minute to buy a $25 gift card for the mailman.
The late additions of folks who aren't friends or family members can quickly bust your holiday budget. Those small extra gifts -- even if they're $5 worth of lottery tickets -- can add up. You are under no obligation to provide a gift for your dog sitter, mail carrier, or children's karate instructor if you don't have enough room in your holiday budget.
3. Don't Count on a Holiday Bonus
You might receive a holiday bonus every year -- but you still shouldn't count on that bonus when setting your holiday budget. Instead, create a budget based on your normal monthly income. What if you overspend only to discover that this year your company is not passing out holiday bonuses? Suddenly, you're in a financial hole. And if you do get your bonus as expected? It's better to invest that extra money or use to it to pay off credit card debt than it is to spend it on holiday presents.
4. Don't Just Go Through the Motions
Retailers want you to spend, spend, and spend some more during the holiday season. Your holiday budget should provide you with the blueprint you need to ignore this noise and spend only what you can afford.
Unfortunately, too many consumers make budgets but then never follow them. Once they spend more than they can afford, they turn to their credit cards. This is a huge mistake. If you put too much on your credit cards this shopping season, your holiday gifts will be long forgotten before you pay off your high-interest debt. When making a budget, actually do it in good faith. If you deliberately break your spending budget, what's the point of even making one?
5. Don't Forget Other Holiday Expenses
You might not overspend on anyone's gift this year, but that doesn't mean that you won't break your holiday spending budget. The holidays encourage all manner of overspending. You might be traveling to visit relatives, which might require you to spend on hotels and gas. Maybe relatives will be visiting you, which means you'll be spending more on food. Make sure to plan for these sometimes forgotten expenses when making your holiday budget. If you don't, you might shatter it.
Do you make any of these holiday budget mistakes?