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Woman looking at Christmas shopping listFigure out how much to spend

A sensible guideline for holiday spending is to spend no more than 1.5% of your annual income. For example, if you make $25,000 a year, your maximum holiday spending budget should not exceed $375.

To create a sensible holiday spending plan, follow the tips below and see “Manage Your Holiday Spending” by the American Financial Services Association Education Foundation (includes timely holiday tips and a budgeting spreadsheet to help you spend wisely during the holiday season).

Know the pros and cons of different payment methods

  • Cash is often the best way to pay — no interest payments to worry about!
  • Debit cards can be a good choice because they don’t allow you to spend more than you have. However, they can be lost or stolen, and are not typically covered by consumer protection policies.
  • Gift certificates are usually limited to a specific amount and store. In most cases, they have an expiration date. They are usually non-refundable if lost or stolen.
  • Gift cards are convenient and make great gifts for people on your list who are hard to buy for. However, they are limited to a specific amount and store. Some vendors require them to be purchased with cash. Tips for buying gift cards from the Federal Trade Commission’s Consumer alert.
  • Credit cards work well if you can pay your bill when it arrives. It is a good idea to deduct your credit card expenses from your checking account before the bill comes in, so you will be sure to have the money to pay the bill. Unlike debit cards, most lost or stolen credit cards are covered by consumer protection policies.
  • Lay-away allows you to set aside quality item purchases while paying for them over time — with no interest. Be sure to read the store policy.
  • Family coupons can be a creative way to give for the holidays. Use your imagination to meet the needs of people on your gift list.

Tips for successful holiday shopping

two men shopping in a hardware store; photo by Edwin Remsberg, USDANo matter where you shop — online, at craft fairs, department stores, warehouses, specialty stores such as hardware stores — consider these shopping tips:

  • Do your homework. Search the Web for information, check consumer reports, talk to others, especially when shopping for high-priced items like cameras, electronics, etc.
  • Always shop with a list. Your list should include the names of the people you are shopping for as well as gift ideas and a budget for each item. Be sure to take along any store coupons when shopping for items on your list.
  • Shop when you feel refreshed and relaxed. Shopping when you are hungry or tired will cause you to overspend. Hurrying will increase impulse buying. Shop out of season or midday during the week if possible — the stores will be less crowded. Shopping alone can help you avoid distractions.
  • Use coupons wisely. If you can buy an item with a 10% off coupon for less somewhere else, shop where you save the most. Read the conditions of coupons to make sure they don’t require you to buy something you don’t need in addition to the product you want.
  • Review sales flyers and bring them with you. Some stores will honor others’ prices. Include store names, prices, and sale dates on your shopping list. Avoid running from one store to another.
  • Shopping with and for kids
    • If you must bring children along, get them involved by giving them a job: have them look for an item, hold the coupons, etc. They can learn to shop from you.
    • If your children create a list for Santa Claus, you may want to have a conversation with them about how much Santa can bring this year. Point out that they may write down what they want, but Santa will bring only three or four items on their list. This will give kids the option of paring down their choices.
    • As children get older, their wish list gets more expensive with iPods, cell phones, cameras, etc. You may decide to give them a cash gift that they can use towards these items.

Tips for shopping online

Online holiday shopping is a popular option for some shoppers. It can be quick, easy, and a relaxed way to shop. You can easily comparison shop online, anytime day or night.

  • Only use websites that you trust. Check their reputation before buying.
  • Protect your personal information, including passwords. Shop only at secure sites. Look for “https://” at the beginning of the website address, as well as a small padlock icon in the address bar or at the bottom of your browser window. These indicate the site is secure.
  • Compare prices and shop carefully before buying. Beware of impulse shopping or spending more than you intended on over-priced, lower quality items.
  • Check shipping and return policies.
  • Track your purchases for the purpose of staying on budget and possible exchange or return.

Ways to reduce your holiday costs

  • Stay within your budget!
  • Give to a charity in someone’s name — it serves two purposes.
  • Give a coupon for services you can provide — such as gardening or cooking.
  • Draw names and set limits on gift prices.
  • Make a gift. This can be easier than you may think. For example, put together cleaning supplies, a decorative bottle, and our money-saving cleaning formula recipes.
  • Shop year round to take advantage of seasonal sales.
  • Watch for unexpected expenses such as holiday decorations, wrapping paper, party outfits, more phone calls, Yankee swap, and extra baked goods for office parties.


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