While it’s easy to get into the giving spirit during this time of year, the allure of holiday shopping sometimes results in reckless spending, which may compromise your plan. While it is nice to give to your loved ones, most of them would not want to stop you from achieving your goals and objectives to do so.
Here are a few tips to help before you start your holiday gift hunt.
- Set a Budget – Determine how much you can afford to spend this season. Not sure where to start? A common rule of thumb is to not spend more than 1% of your gross annual income on holiday spending, which helps you to visualize exactly what you’re spending out of what you’ve made this year. Take into the account not only gifts, but decorations, travel costs, expenses on food and holiday cards as well. Tracking your spending is a good way to be aware of where your money is going and will help you to keep your budget.
- Plan Ahead – Creating a gift list ahead of time means that you will be better prepared to take advantage of Black Friday, Cyber Monday or Boxing Day deals. Have a price range for each individual so that, when it is time to buy, you are aware if you are staying within your established boundaries. Buying gifts early will also help you to take your time and to reduce stress by avoiding last minute shopping.
- Cash Only Shopping – Consider paying cash when you are buying gifts, as it will help you to keep track on how much you spend. One of the drawbacks of credit and debit cards is that they encourage you to spend more than you intend to by giving you easy access to capital. Studies show that people tend to spend more with a credit card compared to cash, so avoid putting gifts on your credit card as it may take only a single tap to overspend.
- Treat Yourself, with Caution – After spending all that time on other people’s gifts, it’s nice to include yourself in your generosity. At the same time, try not to fall into the ‘shopaholic’ state of mind as this is how retailers get you to spend more than you had intended over all of the deals of the season. Just because something is on sale does not mean it is going to bring more joy for you or be worth what you spent.
Remember that gifts don’t have to be expensive to touch someone’s heart.
Good luck with your hunt for the perfect gifts!
Cattelan Private Wealth Counsel Team