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There's nothing worse than opening up your mail in January and finding that you spent far too much on your credit cards for all those holiday gifts. Try as we might, we just seem to overspend on our family and friends. If you want to control your holiday gift spending, here are 5 ways to keep things under control.
Determine Your Total Budget
What can you really afford for gifts this year. Decide this first and be realistic. If it has been a lean year and you really can only afford a few hundred dollars, then set a low budget. Even if times are good, ask yourself what your real financial picture is and adjust accordingly. Come up with an exact figure that you and your family can live with. If you don't have a budget, you'll end up spending far more money than you probably should.
Create a Detailed Budget
It may be awkward, but create a line item budget for each individual based on what you think you will be buying them or how much you want to spend on them. Add all your gift recipients and total all the line items. If it totals more than your budget, you'll need to trim some of your line items or eliminate some of your recipients. If you still want to get presents for those that you can't afford, think about getting a low-cost stocking stuffer instead.
Track Your Spending vs. Budget
Every time you buy a gift, compare the price versus your line item budget. If you go over for any gift, you'll have to make it up on another present. If you shop online you'll have a much easier time of managing your budget since you can rapidly see prices and remove items from your shopping cart if you are over your budget. A good strategy here is to be 20-30% under budget in the beginning so that you can come out even when the inevitable "perfect" present for someone very important to you shows up.
Don't Forget Taxes and Shipping
Sales taxes can add 10% to a purchase and shipping can be as high as 20% on some items. Don't forget these critical costs or they'll make your $1,000 budget turn into a $1,150 reality. If you've budgeted $20 for a gift, the price tag should actually be $18. If you are shopping online at a vendor like Amazon, most retailers will have free shipping. Be careful not to purchase your gifts too late or you might just find yourself forking over $20 for overnight shipping on December 23rd.
Remember, It Is the Thought That Counts
Really, nobody is going to be impressed with the fact that you spent $100 on them versus $50. Finding something that is personal or meaningful to them is far more important. Many times, those gifts may cost little if nothing. And of course, if you are creative, you may make a better present with your skills than you could buy. A plateful of brownies or a handmade scarf are often more memorable than an overpriced gift basket or a gift card that has little meaning. Be creative and it will be easier to stay within your budget.
If you use these 5 points you are far more likely not to wake up in January with a Holiday Spending Hangover.
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