By Hon. Kimberly Yee, Treasurer of Arizona
The holiday season brings together family, friends and gift giving. The higher than normal shopping and spending during this time of year gets a lot of families “in the red.” Not the traditional Christmas red, but the bad debt kind of red, where people spend more than they have in the bank. By the time the new year rolls around, they find themselves climbing out of a financial hole, when they’d be better off starting the new year fresh and debt-free.
As the Treasurer of Arizona, I visit with families and students all over the state about responsible money management, including saving, smart spending and giving back to others. Spending within your budget is more important than ever, especially this time of year and as we are seeing higher prices. This holiday season, give the gifts you desire for your loved ones, but keep the costs in check with your pocketbook. While doing so, you can give yourself the gift of being debt-free in the new year.
Check out these 5 practical tips for holiday spending:
1. Create your holiday spending plan.
As we enter the holiday season, it’s essential to map out your holiday spending plan and budget. Once you figure out how much you can afford to spend, make a list of everyone you plan on getting gifts for including your family, friends, teachers and coworkers. Also take into consideration other holiday expenses such as decorations, food for gatherings, greeting cards and charitable contributions. By making a spending plan and sticking to it, you can have the confidence of entering the holiday season with a financial peace of mind.
2. Take advantage of sales and discounts.
Maximizing savings while shopping is an essential strategy to avoid overspending. Since you already have your budget and spending plan mapped out, start by conducting thorough price checks across various retailers to identify the best deals for your desired items. When shopping online, take a few extra minutes to search for coupon codes. You may be able to score a discount on your purchase, a code for free shipping or other special promotions. By combining price checking with the strategic use of coupon codes, you will be equipped to make cost-effective purchases, ensuring your gifts are both appreciated and affordable.
3. Make a shopping list and check it twice!
Before you start shopping online or in-person, create a list of everything you want to purchase on that specific outing. Stores are designed to incentivize you to buy as much as possible, so walk in prepared with a plan. This tip applies to the non-holiday season, too. When you enter the store, look only for the items on your gift list. You will be less tempted to overspend and buy items that are not on your list when you remind yourself of your set budget.
4. Avoid credit card debt and “buy now, pay later” purchases.
NerdWallet’s annual holiday shopping spending report found that nearly 30% of Americans have not fully paid off their credit card debt from last year’s holiday season. Consider opting for cash transactions to keep yourself within spending limits or ensure you have a clear plan for timely repayment of credit purchases. While it may be tempting to use an after-pay program, try your best to only buy what you can afford at the time of purchase. Payment plans can have hidden fees or interest rates above 15%.
5. Organize a holiday gift exchange.
If you have a large family or friend group, planning a holiday gift exchange with a price point can help limit spending this holiday season. By only purchasing one gift, your entire group will save money and still have an exciting gift giving experience. At the Arizona Treasurer’s Office, my staff does an annual white elephant gift exchange with a designated maximum spending limit. This allows staff members to be able to participate in gift giving with coworkers, but avoid the obligation of buying gifts for everyone. Our annual gift exchange is a highly anticipated holiday tradition and watching the competitive gift trades is always a highlight of the team building experience.
As we enter this joyous time of year shared with family and friends, I extend my sincere wishes for a wonderful holiday, even in the heart of this busy shopping season. The good decisions you make for holiday spending will navigate you into the new year with the financial freedom you deserve.
