When it comes to taking control of holiday spending this year, a recent survey by Deloitte offers insight on where to start if you want to stay in the black on Black Friday, Cyber Monday and beyond. Just look in the mirror.
Gifts make up $487 of the estimated $1,462 that survey respondents indicated they plan to spend over the holidays. The rest can be chalked up to non-gift items: the stuff we buy for ourselves. This includes clothing, which respondents plan to spend 22 percent more on this year than last ($182), and household and holiday items, which log a 33 percent increase over last year ($124).
Perhaps it's no coincidence that "merry" starts with "me."
One of the best ways to manage holiday spending is to create a budget that anticipates more than just spending on gifts.
These five steps can help you set, and keep, a holiday budget.
1. Be like Santa and make a list. We're talking about more than a gift list, though that's important, too. Begin your list with what you have already purchased to make sure you're not buying twice or too much: the National Retail Federation notes that 40 percent of holiday shoppers get buying even before Halloween. Your list should include items such as plane tickets, holiday food and décor, and those holiday gifts you bought this summer at the beach.
2. Budget for "self-gifted" items. Black Friday and Cyber Monday have become hard-to-resist sales events for household and personal expenditures. Prices may be good, but ask yourself if they are worth the credit card debt you might incur. Think back to last year's sales: Did you buy because you needed (and are using) the items, or are some collecting dust or still in their packaging?
3. Check your list for unnecessary expenses, or items that can be purchased at some other time of the year. The goal of this list is to itemize expenses that fall outside of your normal monthly spending, so you do not spend too much. It's also a good idea to designate which items you intend to purchase with cash and which gifts go on plastic. This can help you control credit card spending.
4. Compare this list to your regular and out-of-pocket monthly bills, such as mortgage or rent payments, car loans, utilities and daily expenses from gas to dining out. If you don't track those expenses, start now. Use this worksheet to track your spending.
5. Review the numbers. Now that you can see how you spent—and plan to spend—your money, look for ways to save. Some strategies may be simple, like cutting back on holiday entertainment or decorating costs—or reining in your urge to own another reindeer sweater. The holiday season is also a good time to review your current cell phone or cable packages and inquire about special offers that could save you money for many months to come (but be sure to read the fine print).
Taking control of holiday spending is a gift that can pay big dividends in the coming year. If you do a good job, you can accomplish other financial goals, such as building up your emergency fund or increasing your retirement savings.
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