Posted by W2W Expert Panel.
Gifts aren’t the only thing you should keep under wraps
One Christmas, when I was not long out of college, I wanted to share some holiday spirit with my colleagues, so decided to buy them all a small gift. I wrote a list and assigned each one a dollar amount—nothing big. I was still carrying a lot of debt back then, and I knew they would appreciate the gesture. Imagine my embarrassment when one of these coworkers accidentally caught a glimpse of that list—with $10 next to her name—while we were out shopping together. We continued down the aisle as if nothing had happened. Moral of the story: Nobody wants to see their relationships reduced to a dollar amount! At the end of the day, we value the time put into buying and wrapping a gift, no matter how inexpensive. To this day, I keep making lists—to avoid eleventh-hour dashes for gifts and overspending. Just be sure to keep your gift list under wraps!
If you find yourself reaching for the credit card yet again this year, make it your very last stressful December. Try to get ahead of the curve and start setting aside just $50 per month—you’ll have $600 in your account by this time next year, and giving will be as enjoyable as it’s supposed to be.
Increase the “pain of paying”
You know that feeling of internal discomfort you get when parting with your money? Behavioral economists call it the “pain of paying.” Buying something with a credit card is less painful (in the short term!) than handing over cash—and this leads to overspending. Companies are getting better and better at making us part with our dollars—by making transactions increasingly less painful. The great thing about online retail is that you can shop around in your slippers, without lifting more than a finger. The downside, of course, is that it’s becoming easier to blow your budget. Therefore, I only use online retailers offering Pay Pal or Apple Pay—they force you to pay for your holiday gifts with cash you already have. That can really hurt—but you need to get into the habit. Anytime is a good time to start, although ‘tis the season for temptation—meaning credit cards are especially treacherous around this time of year.
It’s Black Friday every day somewhere on the web
Every year, my mom makes a list of every relative, pal and pet she plans to buy a holidays gift for. And next to each name, she includes a dollar amount. That way, she can calculate the total cost well in advance—and avoid going over her holiday budget. Impressed by her prudence, I’ve learned to do the same. Our long-term gift-buying approach gives us ample time to shop around—and take advantage of discounts and deals. Retailers profit from people’s procrastination by raising prices the closer it gets to Christmas, so starting early saves a ton of stress and worry. Plus, if you’re like my mom and me, you get a real joy out of snagging a great price on something special for the people you love. Now that I’m a parent, I’ve updated my mom’s buy-early technique by setting up alerts on my phone (it’s Black Friday every day somewhere on the web). Even if you didn’t start very early, you can still find bargains—but the earlier you start that list, the better.
It’s surprising how few things make a holiday happy
Growing up, we weren’t as well-off as other families—being frugal was something I learned to value early on. My parents wanted us to have nice things, but in order to increase our standard of living, we needed to spend strictly within our means. Even now that I can afford lovely things, I still rarely go over budget—precisely because I know how few things are needed to make a holiday season happy. It may sound like a cliché, but the thought that goes behind a gift really is what counts. An extravagant purchase is less valuable than the effort and time you spent thinking about the person. After all, the holidays are all about spending time on family. When it comes to Secret Santa or hosting a Christmas party, I find that people are actually relieved when you set concrete limits, like $25 for a gift. If you’re gifting to a lot of people, expenses can really add up; I recommend opening a holiday savings account right at the start of the year.
Use technology to filter out temptation
The trick is to start with a fixed budget and break it down to a series of mini fixed budgets for each person you want to spend money on. I write down all the people to whom I plan on giving gifts, from my husband to my nieces and nephews through to service providers.Then I estimate how much I will spend on each person, maybe $100 for a close family member, $50 on their child, etc. Next, I add it all up and see if it fits my budget (which is set in stone from the get-go). If the numbers don’t add up, I recalculate the amounts, and look at who I can give a smaller gift to, if necessary. Crucially, when shopping online, I filter each search according to the dollar limit I’ve set for that person. Only viewing items that are within a certain price range makes you laser-focused and delivers you from the temptation of buying perfect-but-pricey presents for loved ones. And whatever your holiday budget total, it needs to come from your debit card rather than your credit card. If you need more cash, you’ll need to work for it. Fortunately, there are plenty of seasonal gigs in stores and elsewhere, where you can earn those extra dollars.