Year End Planning: Holiday Spending

 Nothing louses up the family budget like the holidays.  There is something about those twinkle lights and pine smell that weakens all resolve to control spending.  It is estimated the average family spends $750* on gifts and for upper middle income families it is often four times that amount.  This figure does not include entertaining, travel, and decorations.  We all know what to do, but here are a few reminders as we approach the SEASON.

First of all remember what it is all about. Gifting is supposed to have special meaning from the giver to the receiver.  Gifting is a way of saying “thank you” or “I love and appreciate you”. If you have a large family, shorten your gift list by drawing names or giving family gifts.  This is one way to cut down on the number of gifts and make the one you give more meaningful.

It is important to set a budget for holiday spending. There is no better control mechanism.  If you cannot control your use of credit, go back to the old-fashioned method and pay cash.  Many stores have reinstituted lay-away plans which help as well. Along with the budget comes the shopping plan.  Both cut down on impulse buying.

If you are experiencing financial distress, set expectations among your family and friends. This is particularly important to do with children. Children are often unrealistic with their wish list.  Discussing what is possible will help create excitement instead of disappointment.  Get children involved in the spirit of the season. Gift certificates are another way to keep within your budget and are often most appreciated by the receiver.

Shop early and shop late. Many folks shop all year for the holidays so they can take advantage of sales.  Late shoppers can also get great bargains especially if they can be flexible in their gifting.   If you are shipping gifts, seek those stores that give free shipping to save a bundle.

Consider home-made gifts. Busy families and seniors so appreciate a basket of home-made goodies. When one of our daughters was going through a tight financial situation she made the most ingenious gifts—a colorful winter scarf, a charming basket we use for magazine storage, and a hand tiled serving tray.  It is interesting that I cherish and use those gifts but I could not tell you what I received last year.

Last but not least, keep your holidays simple and enjoyable. Remember it is not the amount you spend, but rather the quality of the time and thoughtfulness you spend on giving that counts. Happy Holidays.

*Source: National Retail Federation 10/17/2012

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.