- If you don’t have a budget, start with a gift-giving plan
- Don’t spend money you don’t have
- Be aware that supply chain shortages will add an extra layer of difficulty this year
- Don’t forget to reward yourself as well
This year the holidays may still look different to some of us, but one thing hasn’t changed: being smart about holiday shopping will help you avoid financial regrets come January.
To help you out, here are nine tips and five bonus hacks to turn you into a shopping pro. The longer your gift list, the more helpful this could be.
1. Create your gift giving plan
If you don’t embrace the idea of a budget, write a gift giving plan. Put together a list of people you want to buy for, gift ideas if you have them, and how much you want to spend on each one. It’s a simple “who, what, and how much” framework that will help you keep track of your spending.
2. Categorize your gifts
A good starting point is to sort your gift list into three categories:
- The Big Somethings: These are the larger or more personal gifts for the people in your immediate circle, such as close family members and friends.
- The Little Somethings: Gifts for people who may not be part of your inner circle, but are definitely part of your village, such as your children's’ teachers and babysitters, mail carriers, neighbors, co-workers, service people and others. In many of these cases, cash tips are a good idea.
- The DIY/Handmade Somethings: Cookies, crafts, and other handmade gifts from the heart can be given to people in the above categories or anyone with whom you might have a more casual relationship.
3. Create your “cash savings” calendar
The holidays provide plenty of opportunities to buy things on sale. With your list from above, match gifts with sales to get the most bang for your buck. Sites that track Black Friday and other sales are an excellent starting point. Check your “junk mail” and social media sites for deals at local retailers as well.
4. Use your credit card points wisely
Many credit cards let you use accrued points to buy merchandise, often from preferred retailers. The credit card company may even have its own shopping site. Some also provide early access to hot items that may be in short supply. Make sure you aren’t sacrificing points that would be better spent elsewhere. For example, if your points are worth 1.5x if you redeem them for travel, but only one point if you use them to shop, you’re sacrificing points. Your points might buy, say, $300 in merchandise but $450 in travel.
5. Avoid “buy now, pay later” programs
Whether the offer is a layaway program or one of the new installment plans, termed Buy Now Pay Later (BNPL), this is equivalent to running up your credit card balance. Try your best to only buy what you can afford to pay right away or in January. Payment plans can come with interest rates north of 15%. Even plans that promise no fees and no interest come with fine print and can turn into debt traps. If you miss one payment, they can charge hefty fees and back interest.
6. Act quickly to avoid shortages
Many popular items may be in short supply this year because of the pandemic and supply chain delays. If you see an item you want at a good price, don’t hesitate. This is especially true if buying from a business with a reasonable return policy; you can always decide later you don’t want the item.
7. Keep your receipts
Exchanges and returns are quite common. Keeping your receipts will make the process stress-free and help you avoid “store credit only” returns. It’s also a good way to do one final tally of how much you spent and how you did compared to your gift giving plan.
8. Give yourself a little something
While you’re thinking of others, give yourself a little gift to reward yourself if you accomplished something important this year. Whether you created a budget, paid down debt, started a retirement plan, or whatever, put a few dollars aside to say “Thank you, self. You are pretty awesome.”
9. Giving back as an added way of giving
There are two ways to give back to your community. First, shopping locally keeps your money in your community. Many local businesses have struggled during the pandemic. Second, don’t forget the organizations and causes that are important to you. Many of them have had to cancel many fundraising events and are facing funding challenges.
10. Five bonus hacks
- Buy gift cards in the amounts you want to spend, which creates a hard cap on how much you can spend and keeps you within your budget.
- Shop around and check at least two retailers and online sources. Don’t forget web browser extensions such as Honey that can help you find discounts, coupons, and the lowest price.
- Check for coupon codes, promo codes, and shipping codes with a quick Google search. Spend a few minutes for major purchases and you may just find a few extra dollars.
- Check for price guarantees and price matching.
- Follow the 24-hour shopping cart rule. If you aren’t 100% sure of a purchase, leave the item in your online shopping cart for 24 hours. It will force you to think twice before clicking “proceed to checkout.”
Need help budgeting for the holidays? Want to manage your finances better in the coming year? A CFP® professional from Facet Wealth can help you with financial planning that will be a gift to yourself; one that keeps on giving.