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It may be the most wonderful time of the year, but it’s also one of the most expensive. According to a recent Gallup survey, Americans will spend an average of $786 on gifts, and a third of us plan to shell out even more. Yikes! If you want to trim costs -- and, let’s be honest, who doesn’t? -- try following these financial experts’ top holiday spending tips:
If you didn’t shop early, then shop late, says Kimberly Palmer, financial columnist at US News & World Report and author of the upcoming book The Economy of You. “The best sales tend to come at the very beginning of the season, even before Thanksgiving, or at the very end of the season, directly before or right after Christmas. The worst time to shop is when most of us do -- right in the middle of the shopping season, in early to mid-December. Try to avoid that if possible!” With Thanksgiving coming late this year, those who don’t start early may be on a tighter-than-usual holiday shopping schedule. “All the more reason to pay extra attention to timing your shopping,” Palmer says.
Go in with a plan, says Luke Landes, founder of the personal finance site ConsumerismCommentary.com. “A lot of people head into the holiday season without really knowing what they want to spend,” he says. “Coming up with a plan ahead of time and then sticking to it will keep you focused more than looking for deals and bargains as the holidays grow nearer.” Planning also makes you less susceptible to the whims of marketers looking to distract you with so-called bargains. Like Landes points out, “No matter how good the deals really are, companies will advertise them as the best deals ever.”
Be a savvy online shopper, says Mark Ellwood, author of Bargain Fever: How to Shop in a Discounted World. “Install the PoachIt button in your web browser [or try the mobile app version on your phone or tablet.] When you find an item you want to buy online, hit that button while on that product’s page. It will generate a coupon code if any are live and valid anywhere on the Internet, or bookmark it to email you as soon as that must-have goes on sale,” Ellwood says.
If you don’t have a coupon, you may be able to coax a discount out of the retailer with a reverse-psychology process Ellwood calls “the art of cart abandonment.” “Buy items in a two-stage process,” he recommends. “Log onto a site, place the item you want in your cart, and close the browser window. Then wait 24 to 48 hours.” You could receive an email coupon or promo from the retailer to encourage you to finish your purchase. “Users have reported Levis, Coastal, ThinkGeek and Coldwater Creek as all using this trick,” Ellwood says. “Overstock.com has sent prompting promo emails within 20 minutes.”
Pay cash, says Stacy Francis, Certified Financial Planner with Francis Financial in New York City. “Save small amounts of money throughout the year in a gift fund, like an old-fashioned Christmas Club, still offered by smaller community banks and credit unions. Plan to put in a manageable amount each week or month, or have the money deducted automatically from your paycheck.”
If you’re going to use a credit card, prepare it beforehand, says Francis. “Pay off balances or add an additional 20 percent to each bill a few months before Christmas. You'll be grateful for the decreased financial pressure when December arrives.”
Avoid tempting credit card offers, says John Ulzheimer, a consumer credit expert at the credit management site CreditSesame.com. Especially those store credit cards that let you save a percentage on your purchases—they’ll likely cost you more in the end. “Retail store cards have notoriously bad terms, including low credit limits and very high interest rates. Even modest balances not paid in full can become expensive due to the interest.”
That said, do make the most of any existing credit cards with rewards balances, Ulzheimer says. “Check your rewards points balances and you may find that you have accrued enough points that you can claim gift cards, which can be given as gifts and cost you nothing,” he says.
Spend some on charity, says Beth Kobliner, author of the New York Times bestseller Get a Financial Life and a member of President Obama’s Advisory Council on Financial Capability. You’re already in a giving mood, right? So make a little room in your budget to support a needy cause. Parents in particular have an opportunity to teach kids that holidays are about giving, not just about gifts. “Talk to kids as young as preschool age about donating some part -- maybe 10% -- of their piggy bank stash to a cause they’ll like, such as Heifer International, which lets you buy livestock for struggling families,” Kobliner says. Get a receipt and you may be able to take a charitable gift deduction at tax time. But donations don’t always have to be in dollars, Kobliner says. “Kids can give their time and talents, such as singing at a nursing home or teaching grandparents how to Skype. Takes some time, but it’s definitely worth the payback.”