How to Avoid Common Holiday Buying Mistakes

As holiday sales, pre-sales, specials, promotions and marketing have begun to hit the ground running, you’re undoubtedly already starting your plan of how you’re going to tackle the shopping season.

Maybe you fall into the ultimate holiday planner, someone who doesn’t make a move without a list, whether that’s one that includes who you’re buying for, items for your holiday feast or a list of sales you’ll hit and on what days, by the hour.

The opposite end of that spectrum as far as shopping goes are those individuals who aren’t game planning their holidays.

Instead, this group ends up falling into the inevitable trap of spending far too much than they’d like, and aren’t exactly looking forward to the new year, only because it means having to repay debt or replace far too much from their savings or emergency fund, mostly due to shopping, spending beyond their means.

The holiday season doesn’t come cheap.

Christmas, for example, generates in the neighborhood of about 680 billion dollars per year, and that is just under about $1,000 spent per person on gifts, food, decor and other holiday festivities, minus travel if you’re on the move during the holidays.^[1]

If you factor in travel, you can add another $300, and that includes hotels, restaurant dining out of convenience and any other sort of travel you can factor in, per person, including car rentals, gas, etc.^[2]

So roughly $1,500 is going to be leaving your pocket, and that is just the average, not considering those with a propensity to overspend.

That overspending puts a real bind on your budget, and not just for a few months after the dust settles, the smoke clears and the wrapping paper gone for the season.

Holiday debt is something that sticks with you for nearly the entire year in some situations, and most consumers are perfectly fine with that, suggesting that going into debt and using credit cards to buy gifts, food or decorations is acceptable.

Looking at 2016 shopping and how it affected 2017, for example, shows a lack of budgeting and penchant for really paying attention to how you’re spending and what means you’re using to purchase these items.

Nearly 24 percent of the population overspent in 2016, and 27 percent didn’t budget whatsoever, and even more alarming (based on demographics) is 24 percent of millennials didn’t pay off their debt from 2016 until nearly the end of 2017, while Gen-Xers were at 16 percent and even baby boomers lacked in that same category, coming in at 8 percent.^[3]

Fast forward to 2017, and the amount of money spent between years went up to $1,054 per person on gifts and holiday decor, which was up 5 percent from 2016, but even more alarming is 44 percent of shoppers went into debt $1,000 and another 5 percent went into debt that hit $5,000.^[4]

Although 5 percent isn’t terribly bad, that $5,000 benchmark for additional debt is hardly advisable, but often is accepted only because of the idea that the holidays are off limits as far as worrying about how much is being spent.

Nothing could be further from the truth.

That same study showed that only half expected to pay their 2017 holiday debt within three months, with 29 percent needing at least five months and about 10 percent who said that minimum payments are the best they can do.

That’s the sound of a collective group of financial experts shaking their heads in disbelief.

Perhaps the biggest inditement of the holidays as far as spending and debt is concerned is the true notion that most shoppers just give up on the idea that shopping and the holidays won’t, in some form or fashion, equal debt.

Approximately 57 percent of shoppers over the holidays expect to go into debt, so more than half of those people you see at retail stores buying up what they can get their hands are have resigned themselves to adding debt.^[5]

For some reason, arguments abound over holiday spending (or overspending) as being just another facet of this season, being able to buy and share, give and receive a little more during this time period than others, without much regard to how much is being spent.

That mentality isn’t just off-putting but outdated and downright inane when you consider how little people have saved on average (less than $1,000 for most) and just how much debt households accumulate.

Instead of using the holidays as an excuse to overspend, consider these tips to avoid it and come out of the buying frenzy cool, calm and collectively in better shape financially than you were before buying ensued.

Avoid shopping for yourself during the holidays

Funny enough, this is an all too common theme for most when it comes to spending money during the holidays.

You often here individuals say that they love Black Friday, Cyber Monday and holiday sales in general mostly due to the fact that they can also use this time period to buy what’s on their own personal wish list, too.

This only is going to add to how much you spend and lead to blowing away a budget you have in mind.

Most don’t realize that the average person, during the holidays, spends about $130 on themselves as part of the buying season.^[6]

This act is often referred to as “self-gifting,” and is far too common, mostly due to marketing and advertising suggesting this is part of the holiday process, and of course, because sales are so rampant that you’d be hard pressed to find someone who hasn’t waited all year for a cheaper TV or laptop, Apple iPhone or some other highly discounted product around this time.

On average, about 22 percent of the population is “self-gifting.”^[7]

Considering that you’re trying to keep costs down, maybe save your gift for another time of year, or a different sale altogether.

Lay off the decorations; you should have bought them the day after Christmas last year

Last year saw decorations cost the average person about $100, and that number is pretty consistent from one year to the next and account for nearly 13 percent of your entire holiday spending budget.^[8]

While $100 doesn’t sound like that much money, you have to consider more elaborate designs and lights costing more, and this being an expense you should be able to limit.

Mostly, that limitation should come from buying your holiday and Christmas decor after the holidays at whopping discounts. Your goal should be to stock up after Christmas and then have enough for years to come, thus wiping away any need to buy more wreaths, lights or any other holiday decor that would be applicable to how you celebrate.

A quick glance of last year’s post-Christmas sale on decor shows discounts that reach into the 80 percent off category.^[9]

Even if that means you take this year, go with what you have, and then buy in preparation for 2019 holiday season and beyond, so be it.

Budgeting the holidays is no different than what you’re doing year-round

The irony of holiday shopping is that even the most prudent and diligent budgeters tend to throw that proverbial caution to the wind when it comes to not really calculating what they spend or determining a realistic wish list or buying space for who’s on their list, and ultimately learning to limit that, with respect to their parameters.

We’ve talked about adding debt as part of the holiday shopping, but why not implement some sort of budget as part of it?

That budget should have a number attached to it, but also consider ways to save money as part of the holidays. We’re not suggesting the holidays and what comes with it can’t be pricey, but have you considered alternatives? How about buying generic brands as part of your grocery list?

That’s just one way to save, but also, as far as the gift giving element, you’ll need a budget but also consider budgeting per person based on a dollar amount to each person, rather than using a gift in mind.

For instance, if you’re niece wants a new tablet, put a budget of $100 on it and go from there, rather than saying “oh, this one is only $399” even if others are less and just as feasible of a buy.

The other piece of budgeting comes down to knowing what you can spend. If you have $500 to spend and 5 people on your list, divide up how much you want to spend accordingly but don’t compromise that $500 figure. Spending $800 to suffice what you want to get each is an easy way to ruin your budgeting and find yourself in debt.

A study showed that 65 percent of Americans actually set a holiday budget, but 77 percent say they’ll exceed it, with less than 40 percent having a game plan to budget, post-holidays.^[10]

The one key percentage from that same study is 33 percent, and that’s how many shoppers buy for the holidays year-round, not exactly a lot. That is telling in that, again, if you have a gift in mind, and you buy when you see an item on sale, it saves you from scrambling to find it potentially during the holidays and thus overspending potentially when you have to overpay to get it.

Don’t feel as though if you don’t get a gift that is pricey or expensive that somehow you’ll disappoint the person on your list. A $40 tablet on sale might not be the $500 one, but it does the job and appreciation isn’t going to wane as a result of this gift, or others like it.

As much as you don’t want to disappoint those on your wish list, you also have to consider your hopes, dreams and financial future as part of this few weeks, months leading up to the holidays.

Mortgaging your future, borrowing from your savings account or retirement and not budgeting you spending is only going to further complicate the effort you’re making to save money and be financially stable.

The thrill of gift giving and making sure everyone leaves the family gathering or party with a smile on their face is rewarding, but if you’re not really happy about spending too much or hidden costs getting the better of you, the experience in totality won’t truly be very rewarding to you.

If you don’t think poor decision making plays into how the start of next year is going to look and feel for you consider this: Fifty-three percent of the American population chooses saving money as their New Year’s Resolution, making it the most popular choice of the masses.^[11]

So why not start early on that resolution and not have so much buyer’s remorse heading into 2019 and have the holidays be a source of enjoyment and not regret this season?

A little planning, patience and restraint go a long way to accomplishing just that.