Holidays on a budget

If this holiday season has your head spinning faster than the Sugar Plum Fairy can pirouette, you’re not alone. Between the iPad 2, Kindle Fire and Wii Fit, toys seem more high-tech–and high-priced–than ever and many families are still reeling from the recession. “How can I afford to fulfill my kids’ wish lists if I couldn’t even take a vacation this year?” you might be wondering.

Well, my first piece of advice is to stop worrying. There are several things you can do to get through this holiday season without breaking the bank or abusing the eggnog. Here are some of my favorite holiday-savings tips:

If this holiday season has your head spinning faster than the Sugar Plum Fairy can pirouette, you're not alone.

  • Create a budget and stick to it. I normally suggest spending no more than 1.5% of your annual take-home pay on holiday purchases. If you’re using credit cards to pay for everything, this is an amount that can be easily paid off by February. This also means that if you allot yourself $100 dollars per recipient but spend $150 on Mom’s cashmere sweater, your dad or brother might have to get that $50 DVD set instead of that $100 golf set. Over-spending on each person is the easiest way to break a budget.
  • Make a list, check it twice. You should know what you’re buying, who the recipient is, and how much you want to spend per item well before you walk into the store. This will help you stick to your budget (see above) and prevent impulse purchases!
  • Treat it like a research project. It may not sound fun, but do your homework, and give yourself enough time to do the work. If you rush, you’ll make hasty decisions that will cost you. Find out which stores are running promotions, and don’t be afraid to go to multiple stores to get the best deal on a certain item. If you don’t see what you’re looking for while you’re out, don’t force yourself to buy something just because you’re in a store. Wait, brainstorm some more, and get it next trip.
  • Don’t shop if you feel like Scrooge. If you’re in a bad mood, you are more likely to use retail therapy to feel better. Don’t do this! When I feel grumpy while shopping, I just leave and do some holiday cooking. The stores will still be there when I feel better the next day.
  • Use gift-cards to your advantage. If you’re like me and have a small stockpile of gift-cards left over from birthdays and other holidays, now is the perfect time to use them. It’s like bonus cash, and no one will ever know you bought their gift using a gift card.
  • Team up. If you’re looking to save money, talk to your siblings or cousins about doing a group gift for someone. An LCD TV may be outside your price range, but divided amongst your seven cousins, it suddenly becomes reasonable — and Grandpa will be thrilled. Ebay Group Giftsmakes it even easier to do this: it digitizes the process so you’re not running around collecting money from everyone.

Do you have tips for saving money during the holidays? We’d love to know! Share your tips here.

Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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4 Responses to Holidays on a budget

  1. Margaret Franciso says:

    A pirouette is a leap. Not a spin.

    • Lisa Ardrey Lisa Ardrey says:

      Actually according to a pirouette is a rapid whirling about of the body; especially : a full turn on the toe or ball of one foot in ballet, so i think we’re covered. Thanks for the comment.

  2. Cathy Fourman says:

    What about sticking to online shopping? You can easily do the research and you don’t have to make several time-and gas- consuming trips to the stores, avoiding impulse purchasing.

  3. Anonymous says:

    I did all of my holiday shopping online this year, especially when one of the largest online retailers offers free 2 day shipping – why not. You get exactly what you need and I have found that I dont pick up anything “extra” like I do when I am in the store.I ended up saving money by doing it all online.

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