Holiday Spending On A Budget - Brief Article

THE holiday season is here once again, and much of your good sense when it comes to money matters has flown out the window just as quickly as last year's resolutions. What is it about the red and green that leads us to overindulge, spend money we don't have and end up broke after all the gifts have been unwrapped Are consumers looking at their bank balances through candy cane-colored glasses? Probably. But it's more likely that consumers just don't know any other way or, at least, pretend that they don't know any other way.

To get around the conflicting emotions and to pave the way for a successful holiday season, consumers should follow certain steps, experts say. That's the only way to ensure that your holiday will be healthy, happy and debt-free.

Get Organized And Make A Budget

The solution to the holiday blues "sounds real simple," says Dr. Charlie Carter, an economist at Clark Atlanta University. "Make a list, set a limit on the amount and don't go over it."

In other words, build a holiday budget. That sounds good, but when retailers begin their advertising blitz with "low, low, prices," it's a little hard to remember that the "low, low prices" are higher than you'd planned to spend. Set a realistic budget and stick to it. Write down every potential expense, including money for snacks and travel.

"[Budgeting is] a way of saying, `This is what I'm able to do,'" says investment consultant and author Pamela Ayo Yetunde of San Francisco. "It makes your other dreams possible."

The dangers in overextending yourself are that you can create more consumer debt than you can handle. Personal financial experts say you should start planning now to find the best and most debt-free way to give presents to your family and friends. Whether it's a cruise for your parents or stocking-stuffers for your co-workers, finding the perfect gift at the best price can take a lot out of you, and lead you on a downward spiral for the new year.

"When you budget, you make a commitment early on to spend a certain amount," says Yetunde, author of The Inheritance: A Stock-Picking Story. "Determine what your needs are. I don't mean wants, I mean needs."

Plan Ahead

In determining those needs, you should realize that the best window for holiday shopping is really Oct. 1 to Dec. 1, says Dr. Carter. That means the best time to buy gifts isn't Christmas Eve. Instead of waiting until the last minute, plan to shop early so that you have time to compare prices and look for the best deals. Some finance specialists suggest shopping all year for holiday gifts to spread out your purchases. Know what you want to buy, go to the mall or store with a list and stick to it. Avoid shopping for the sake of shopping, and resist impulse buys.

There's also the speed factor that shopping with a list brings. You can get through the stores much faster if you've set a goal and are sticking to it.

"December is the dream period," Dr. Carter says. "Consumers think they're getting items for a less-expensive price than they would otherwise pay."

Think About Money And Ways To Save It

The main threat to holiday happiness is worrying about money. But you can avoid money woes around this time of year. Pay with cash whenever possible. Use credit cards responsibly, and don't take on more than you can pay off within two months. Every day you carry a balance, you end up owing more money to the credit card company.

You should also keep your receipts from all purchases. There may be a problem with an item, or the company could have made a billing mistake. It's important for you to safeguard your interests in financial matters.

The goal for the end of the holiday season is no change, or even an improvement, in your financial status. "You should be in no worse a position than you were in October," Dr. Carter says. "Your debt should be the same."

Look For Gift Alternatives

Consumers may also want to consider alternatives to buying expensive gifts. Arrange for a grab bag with your co-workers, instead of giving separate gifts.

Give your favorite niece a gift from the heart, such as a copy of your favorite book. Promise your little brother, in the form of a written IOU, that you'll shoot baskets with him every Saturday afternoon for a month. Make a donation to your best friend's favorite charity.

There are all kinds of ways to give gifts from the heart, especially if you're stumped for an idea or have to give a gift to someone who has everything.

"[Buying expensive gifts] limits expressions of love ...," says Yetunde, who also wrote Beyond 40 Acres & Another Pair of Shoes. "Christmas is about redemption, and it's about love."