ST. PAUL, Minn. (Nov. 17, 2016) – It’s November and the holiday shopping season is fast approaching. Ideally, you’ve planned ahead: You’ve saved. You know your budget. And you’re sticking to it as if your life depends on it.
Well, not always.
“It amazes me how Black Friday and the holidays always seem to sneak up on people, even though it falls at the same time every year,” said Karissa Bakken, member advisor and local budgeting expert at the Affinity Plus Federal Credit Union branch in Cambridge, Minn.
Jake Dixon, Affinity Plus Solutions consultant, said every year he sees the results of people not taking the time to figure out how much they want or need to spend.
“To be sure, it’s not unique to our members. Many people spend more than they can afford to pay, relying on credit cards to fund their purchases,” Dixon said. “That leads to unmanageable debt.”
Overall, the National Retail Foundation (NFR) predicts an increase in 2016 sales during the holiday season. PricewaterhouseCoopers predicts holiday spending will rise 10 percent from the 2015 holiday season and that household spending will average more than $1,100.
PRESSURE AND LACK OF PLANNING
Affinity Plus member advisors say the most-common issue is the lack of clarity about all holiday expenditures including:
• longer grocery lists;
• holiday inspired donations.
If you’re not careful, all can contribute to holiday over-spending, they said.
“Often, people seem resigned to the inevitability that money will be tight this time of year,” Bakken said. “Overdrafts in checking accounts and late loan payments become more common.”
Part of this financial resignation is due to a lack of planning, she added. For others, they feel pressure to go all out.
“If they don’t purchase a certain amount of gifts, decorate to the hilt and serve five-star meals, they fear their family or children will feel cheated out of a ‘real’ holiday experience,” Bakken said.
The result, the Affinity Plus experts said, is that best intentions are foiled by over-spending and the stress and anxiety that follow.
HOLIDAY BUYING SEASON STRATEGIES
Even if you haven’t established a holiday savings fund, the holiday season often extends into January, so there’s still time to put together a spending plan and avoid taking on hefty debt.
“You can take ownership of your holiday spending. You have to put in the work, but you can do it in a way that makes sense for you,” said Sara Lettengarver, Affinity Plus mortgage processor and financial educator.
Affinity Plus’ top strategies:
• Use a calendar. What upcoming events will require you to spend money? Estimate how much you think you’ll need to spend, and then compare that to your pay schedule. This will help you understand the flow of your money coming in and going out, which can simply provide peace of mind and help you get organized.
• Make a gift list. Identify who you need to give gifts to and create a list of the items you’d like to buy each person.
• Tally what you already have. Inventory items you already have, like baking supplies, greeting cards and wrapping paper. Cross those off your shopping list.
• Spread out your shopping. If you can, don’t do all your shopping at once. It will help you avoid feeling overwhelmed and you can spread out costs over the course of several weeks.
• Look for free shipping. Many vendors offer this perk this time of year so if you shop online, make sure shipping is free, otherwise you may end up spending more on a purchase.
• Wait to buy. Many vendors put holiday items on sale immediately after the holidays, so plan to stock up on items you use every year, like wrapping paper, stationary or decorations. If you won’t see family or friends until after the holidays, wait to buy their gifts and take advantage of post-holiday sales.
• Avoid high-interest credit cards. Unless you’re certain you can pay off your full balance when you get your statement, keep the credit cards in your purse or wallet. Better yet – leave them at home. If you have to use a credit card, look for a low-rate option, or consider a small personal loan. A loan will help you stay on track of paying off your expenses in a shortened time frame.
• Alert yourself with account alerts. Affinity Plus and other financial institutions give you the option to have an automated email or text sent to you when your account reaches a certain balance, when you’ve spent a certain amount or any time you use your debit or credit card. This may help you be more mindful of your spending behavior.
• Be mindful of grocery costs, too. If you plan on cooking for a large group, or just enjoy trying new holiday recipes, make sure to budget more for grocery bills. Avoid sales tactics like “10 for $10” or “Buy two, get one half off.” If you only need one or two of an item, you’re going to spend more with those “deals.”
• Pay your bills on time. Stay on top of all your existing financial commitments. That makes it easier to manage your finances moving into the new year, even if you do take on some debt from holiday expenditures.
• Plan for 2017. Take note of the things you spent money on this year, and create a spending plan for next year. Start small – open a separate savings account just for holiday expenses, and set up an automatic transfer of $10 each week, or $25 every pay period. With this plan, starting now will give you over $500 for the 2017 holiday season.
EXPERIENCE THE HOLIDAYS
Affinity Plus’ experts understand that part of the fun of the holidays can be shopping and spending for others “and we want our members to be able to enjoy this time of year, whatever that means to them,” said Stephanie Musgrove, business development specialist and certified financial educator.
Still, one approach that can reduce the emphasis on spending is making the holidays about experiences.
“I encourage people to start traditions and experiences that don’t rely on spending lots of money,” said Bob Hebert, Winona, Minn., branch member advisor. “Settle in for a holiday movie binge day. Hold a first-annual cookie baking and decorating contest. Walk or drive through your neighborhood and look at holiday lights and displays.”
Finally, Musgrove added that volunteering during the holiday season can have a lasting impact on both the givers and recipients. “The best gift can be your generosity, kindness and holiday spirit to others less fortunate or in need,” she said.