10 tips for holiday spending

$704.18. That’s the average amount that holiday shoppers say they’ll spend on gifts and seasonal items, according to the annual holiday survey from the National Retail Federation. That’s slightly less than the amount shoppers forked over last year to celebrate the season, but still a sizable sum, especially in this economy.
 The survey also found that price will be a main focus for many customers. Here are 10 tips for savvy gift spending, as we all try to stretch our dollars farther. 



1. Make a list and check it twice 
What would happen on Christmas Eve if Santa didn’t plan ahead? Heading to the mall without a thoughtful list of who to buy for and how much to spend is a recipe for post-holiday debt. Map out your holiday spending plan—from tips for the newspaper deliveryman to stocking stuffers for your kids. 



2. Use cash this Christmas
Cash is king this season, especially now that some banks are imposing debit card fees. Behavioral finance experts say that the tactile nature of cash forces consumers to think twice before parting with their money. Not only that, but when the wad of bills is gone, it’s gone. No worry about overdraft fees. No concern about January credit card bills. 



3. If you plan to pay using a credit card, don’t go overboard
Only use 30 percent of your available credit limits. Charge much more and it could affect your credit score, even if you do pay the balance in full, since the amount of available credit you use is a key puzzle piece in the credit score calculation. If you know the holidays will put you in the red, don’t charge more than you can safely pay off in 60 days. For a reality check, use LSS Financial Counseling’s Scrooge-O-Meter to calculate how much those gifts will end up costing you after interest (lssmn.org/scrooge/).

4. Create a giving plan that fits your budget

This is the fifth holiday season since the recession started in late 2007. While the recession has officially been over for years, this economic slowdown clearly has staying power. Many families have been paying down debt and building up their rainy day fund, and understand the importance of prudent financial choices. Use this to your advantage. If your holiday budget is lean this year, be honest. Instead of buying gifts for a dozen cousins, institute a gift exchange, where you draw a name out of a hat and only purchase a single gift. Or get crafty and make or bake your gifts. Jeff Yeager, the Ultimate Cheapskate, has several clever suggestions for gift giving on a tight budget at: aarp.org/money/budgeting-saving/info-11-2009/holiday_spending_under_control.html. 



5. Pick stores with generous policies
Walmart recently announced that it will match competitor prices on items purchased between now and December 25, even after you make the purchase. Sears is offering to beat competitors’ best price by 10 percent. Bed Bath & Beyond is one of the brick and mortar stores that says it will match Amazon’s price this year. By shopping at stores with flexible policies, you can be sure to get the most for your money without having to hit the mall every weekend. Just keep your eyes peeled for better deals. 



6. Watch for retail gotchas
Marketers understand our shopping behaviors better than we do. They know we’ll spend more to trigger free shipping, and are more likely to buy an item when it’s supposedly on sale, even if the price seems a bit high. Before you bite, think through an awesome deal. Ask yourself, what’s the catch? 



7. Add your name to your holiday gift list
Most consumers buy a treat for themselves while out gift hunting. The National Retail Federation survey says shoppers admit they’ll spend about $130 on themselves when out shopping for gifts. Rather than convincing yourself that this is the year you won’t be tempted, factor some “me money” into your holiday budget. 



8. Trade trinkets for taking up a cause
When money is tight, it can be hard to give away. But charities are feeling the pinch, too. Before buying yet another scarf for a distant relative, or wracking your brain to come up with the best gift for the person who has everything, consider the impact you could make by donating that money to a good cause in that person’s name instead. 



9. Support local merchants
It can be easy to fixate on price in tough times, especially when you have a long list of gifts to buy. Hitting the nearest big box discounter is a natural reflex. But imagine your neighborhood without the small “mom and pop” shops. Pledge to spend $50 at three locally owned small businesses. Learn more about the movement to shop local at 350project.net. 



10. Don’t wait until the last minute
If there’s a surefire way to ruin your budget, it’s rushing to the mall two hours before closing time on Christmas Eve. Be mindful. Be planful. Your pocketbook will thank you.


Kara McGuire is a personal finance writer and a St. Paul mother 
of three. Send comments, questions and story ideas to 
kmcguire@mnparent.com.