This was originally published on Monday, October 5, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
It is hard to believe that the year is coming to an end and that the holidays are quickly approaching. As much as we try to enjoy the holiday season we often find ourselves financially stressed. As we all know, overspending during the holiday season is quite common and quite easy to do. Companies and stores spend a lot of money trying to tempt you to spend your money with them. Here are a few tips that could keep you in the green instead of seeing red:
Create a spending limit
Take into account everything that you will be paying for this holiday season. There is much more to include than just the gifts. Think about the other things that can sneak up on you, leaving you to ask the question, “Where did all our money go?” Remember to add in the holiday parties, shipping fees for gifts being sent off-island, ATM fees, more power consumed while kids are home on vacation, and of course, the increase in your food budget. If possible, add another $200 to cover the incidentals like an unplanned gift or party that you have been invited to.
Make a list of who you are buying gifts for and how much you are willing to spend. Create another list with the parties you are invited to and what you plan on bringing and how much it will cost you. Keep a journal of how much you are spending; it is easier to know how much you spend when you actually start watching it add up.
Pay with cash
This is probably the easiest way to stay on your holiday budget: Once it runs, it runs out. Be careful with using a credit card for these expenses. Credit cards make it easier to keep spending without realizing just how much you have spent until the bill comes in. You could ask the bank for all $100 bills. It would make you think twice before breaking a large bill. Of course, be alert, because many thieves plan on you carrying cash. It is also easier to lose and once it is lost you can’t get it back.
If carrying money makes you uncomfortable, use your debit card instead. There are no interest fees and your bank may have an app for your phone to monitor your purchases.
If you are going to use a credit card, know which one is the best to use. Many people have more than one or two credit cards in their wallets. Choose the card with the lower interest rate and balance.
Avoid extra fees that you incur by exceeding your spending limit or using your credit card at an ATM. Pay your balance in full and within the billing cycle to avoid late charges.
Buy least expensive first
If you are looking to buy electronics or other high-priced items, try waiting till the stores put them on sale. Black Friday and Cyber Mondays always offer some great deals.
For those gifts that are least expensive, like gift cards or books, purchase those a month or two in advance and it will not add to your December spending.
With today’s access to gift-giving ideas online, there are no shortages of gift ideas. There are many alternatives to expensive gifts. Many of them mean more as they come from the heart and not the wallet. There are photo albums, homemade art work or decor, and so much more to create. Some use store-bought materials but many reuse items that you may have laying around your house. Gift baskets are always a hit as well. Put an entertainment basket together with some microwave popcorn, DVD’s, and movie gift certificates. Use your talents like sewing, carpentry and scrapbooking to make a gift that won’t be forgotten.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.