5 Frugality Pros Help You Rein In Holiday Spending

by NerdWallet | In Financial Empowerment | 12 December 2016

Periods of increased spending can be financially challenging for anyone – even if you don’t have student debt. The winter holiday season especially can make for tricky budgeting: there are traveling expenses if you’re taking advantage of vacation time, holiday parties to attend (maybe you need a new outfit or don’t want to show up without a bottle of wine), and, of course, gift giving.

While there is a ton of added pressure to spend, it’s crucial to keep a level head and to budget responsibly. The last thing you want to do is fall behind on a student loan payment, go into credit card debt, or overdraw on a bank account. Starting off the new year in financial distress is not worth it.

So, courtesy of NerdWallet, we present you with tips for reining in your spending (without being miserable).

MPOWER Pro-tip

It’s easy to feel like you have to spend a lot during holidays and major life events (weddings, birthdays, etc.) – we’ve all been there. Don’t worry about other people’s judgment of what you show up with to any type of gathering. The people that matter to you most know that if you’re in school or if you’re a recent graduate, you have a lot of expenses (and not a lot of cash coming in). They won’t want you going into excessive debt just to save face. A nice handwritten note, a batch of homemade cookies, or just your physical presence is all it takes to make others know that they are loved and appreciated.

The overflowing expectations around the holidays can entice us to spend more than we can afford. Not only do we have bills to face once the decorations are put away, but 43% of respondents to an Experian survey say extra expenses also make the holidays hard to enjoy.

Now’s the time to plan so your December spirit doesn’t lead to January bills. We asked five experts on frugality what they do to avoid holiday overspending.

Recognize your triggers

Donna Freedman, author of “Your Playbook for Tough Times,” says you need to recognize your spending triggers. Are you trying to make the holidays more magical for your family? Can you resist anything but a great a deal? Knowing what drives your spending can help you stop. Here’s what she recommends:

  • Carry your list with you even after you’ve finished shopping. When you see a killer deal or a gift that’s “more perfect” than the one you’ve wrapped up, use the list to remind yourself you’re done.
  • Make a game out of spending little or nothing for a gift. Freedman likes things that represent “a stirring tale of thrift.” She uses one such gift, a vase with a hole in it, to keep money she finds — on the ground, in vending machines, wherever — for giving to charity each holiday season.
  • Consider making an experience the gift. If you’re already planning a holiday outing with a group of friends, can you agree it will be a gift to one another?

Work with a list

For Tiffany Aliche, aka “The Budgetnista,” step one is making a list of whom you plan to give to and how much you plan to spend. Make sure your gift budget fits into an overall holiday budget that accounts for shipping, decorations, food, travel and entertainment. Her top tips:

  • Check that list twice. It’s easy to forget thank-you gifts for coaches, teachers, the letter carrier, party hosts. Decide what you want to give each person. Once the list is set, adjust it as you go to keep planned gifts and your budget in sync.
  • Use technology. “Price-check online before you buy or go in a store,” Aliche says. Know your price range for every gift on your list and set up price alerts. One of Aliche’s new favorites is the Chrome extension Wikibuy, which looks for better offers as you shop online and applies the best coupon when you check out.
  • Consider making an experience the gift. If you’re already planning a holiday outing with a group of friends, can you agree it will be a gift to one another?

Match your approach to your values

The blogger who writes under the pseudonym Mrs. Frugalwoods says her family’s frugality is “larger than the holidays.” She notes that while the season is “wonderful and it’s fun, it’s not an excuse to dip into your emergency fund.” Her tips:

  • Decide what’s most important and spend accordingly. For her, it’s a family gathering. She hosts Thanksgiving and cooks from scratch rather than buying pre-made or going to a restaurant.
  • Shop with gift cards or cash-back rewards. She prefers giving an item rather than a gift card but occasionally passes along gift cards that were given to her. It’s regifting at its finest.
  • Let your values be your guide. She favors “small, reasonable gifts” and shopping locally.

Know the difference between cost and value

Mary Hunt, the author of “Debt-Proof Living,” blogs at Everyday Cheapskate. She says it’s important to understand that your credit limit is not a license to spend. Try these instead:

  • Shop with cash only; leave your checkbook and credit and debit cards at home. Need more cash? See if you can cut your grocery bill temporarily by using up items in your freezer or pantry, or track down unused gift cards to fund holiday shopping.
  • Know the difference between a gift’s value and its cost. A $20 toaster that you found on sale for $8 is still a $20 gift. If you budgeted $20 but paid less, that doesn’t mean you owe the recipient $12 more in gifts.
  • Define “gift” more broadly. Can you give your expertise, such as setting up a website for a tech-challenged friend? Do you have a treasured possession to pass on? One of Hunt’s favorite gifts was vintage crystal that belonged to her mother-in-law: “She wrapped it up for me for Christmas and got to see me enjoying it, rather than just leaving it to me in her will.”

Plan for thrift

Having a plan is central to being thrifty, says Gary Foreman, founder of The Dollar Stretcher. “If you don’t have a plan, you’ll overspend,” he says, noting that some people don’t finish paying for Christmas until April or May. His tips:

  • Subscribe to online price alerts so you’ll know about price drops for a specific item or for travel. (And unsubscribe later so continual alerts don’t tempt you to spend.)
  • Regifting is OK, especially when you know someone will love something you can’t or won’t use.
  • The thought really does count, and thoughtful gifts can be inexpensive. One of his favorite gifts came when his daughter tracked down an ethnic bakery to get him some kolaches, Bohemian pastries his grandmother used to make. “Once you have needs met, the gifts that make a difference are the ones that say the giver knows who we are. Those are the best and most memorable gifts,” he says.

Bev O’Shea is a staff writer at NerdWallet, a personal finance website.
Email: boshea@nerdwallet.com
Twitter: @BeverlyOShea
The article 5 Frugality Pros Help You Rein In Holiday Spending originally appeared on NerdWallet.

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