Holiday shopping without a budget may be fun, but may be harmful to your fiscal health
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EmailA little financial planning will go a long way this holiday season.
‘Tis the season to over-eat, over-shop and over-spend. Though many people save and plan for this adventure, many others only realize the difficult financial situation they have created after the bills begin to stack up. According to the American Research Group, Inc., the average shopper will spend approximately $861 for the 2014 Holiday Shopping season, up from $801 in 2013. Don’t worry, this can be easily avoided.
These three steps can help keep you fiscally healthy this holiday shopping season.
Step One: Set a plan and budget—and stick to it!
- When setting an annual budget, plan for holiday gift buying season. It happens at the same time every year, so save a little each month and spend only the saved amount.
- No matter how good of a deal it is, if you cannot afford it, don’t buy it. Most deals are clever marketing ploys to actually entice you to overspend by offering what may appear to be a great deal on a complimentary item. It is known as a loss leader, which may even sell at cost or below cost to lure you into the perceived need to buy more.
Step Two: Keep the emotions out of it!
- The plan is set, now execute it. Do not let emotion rationalize additional purchases that are un-needed and outside the set plan & budget. The article titled “Inside the Consumer Mind” by Peter Noel Murray, Ph.D. sheds some light on this very topic.
- Needs versus wants—
- If it is needed to survive, buy it.
- If you only “want it,” for whatever reason, and only if it is within the planned budget, you may choose to purchase it.
- Avoid over buying “wants” that are un-needed and outside budget. This will help reduce potential buyer’s remorse after the purchase.
Step Three: Once shopping is complete—evaluate.
- Track purchases and spending versus planned budget
- Use of a spreadsheet makes this very simple to accomplish and visualize.
- Identify areas for improvements.
- Adjust your future plans accordingly.
This simple three-step process can alleviate a lot of holiday stress. It will keep one fiscally healthy, especially during the hectic holiday gift buying season. By keeping fiscally healthy through the end of the year, the next year can start on a more positive note.
Michigan State University Extension offers a variety of programs to provide expertise, education and development of communities throughout the state of Michigan. By specialists, educators, program coordinators, instructors and associates all working together across lines of specialization, great things can be developed and from the input from citizens of Michigan, relevant and life-changing programs will be delivered.
