Here’s How to Keep Your Spending in Check This Holiday Season

U.S. consumers may be feeling more financially healthy now, but that doesn't mean budgeting should fall off our radar -- especially around the gift-giving season.
By Scott Gamm ,

U.S. consumers may be feeling more financially healthy now, but that doesn't mean budgeting should fall off our radar -- especially around the gift-giving season.

"Ideally, you would have wanted to created your holiday shopping budget last January while thinking about your spending for the year," said Tom Mingone, a founder and partner at Capital Management Group of New York, a financial advisory firm. "But we recommend that people spend no more than one week's gross pay on holiday shopping."

On average, consumers are expected to spend roughly $805 apiece over this holiday season, largely in line with what they spent last year, according to a report from the National Retail Federation.

"I think the hard part for people is that they swipe the credit card as they go, and then they hope in January that the bill doesn't frighten them too much," Mingone said.

He recommends creating a list for each person you plan on buying gifts for, how much you plan to spend on each person and stick to a debit card or cash instead of credit cards. Carrying a balance on a credit card triggers interest charges that can easily snowball and wipe away any savings from holiday discounts.

But it's not just spending on other people that could get consumers into financial trouble this holiday season. A host of other miscellaneous expenses can pop up. "People are visiting friends and family, and are bringing a bottle of wine or a pie, so those expenses add up," noted Mingone. "A lot of times people forget to include all of the tipping for their service providers, so there are a lot of expenses during this time."

Not to mention, some 60% of respondents to the NRF survey said they plan to spend money on themselves.

Mingone suggests that if giving yourself a gift is on your mind, you should remember to buy something nice for future-you: more peace of mind. This is a good time to maximize your annual contributions to your 401(k) retirement account. "There are still a few pay periods left before the end of the year." he said.

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