Credit Cards, Smart Spending

Planning Ahead for Christmas Expenses

With the holiday season here, decorations have appeared and discounters and retailers are ready for their busiest sales period of the year. The National Association for Retailers reports that the average American family will spend about $750 for the 2012 holiday season, which includes Halloween. About $650 of that amount consists of spending that occurs after October 31st.

It’s common for many people to overspend and use their credit cards to pay for Christmas expenses and pay for t for several months in the next year. In preparation for shopping for gifts, decorations and other items, consumers should formulate a plan to avoid spending more than they can afford.

Here are some tips that can help you prepare for the tasks ahead and related expenses.

Budget Strategy

Once you arrive at a figure to spend, make a list of the most important holiday categories for you, such as food, gifts and decorations. Prioritize the segments and assign a dollar amount to each of the items on your list. Going forward, closely monitor your spending for each of the categories.

Allow yourself some flexibility. If you overspend in one area, cover the overage by moving money assigned to a different item on your list.

Reduce Ordinary Expenses

Fund your holiday spending by reducing the money you have budgeted for your day-to-day spending.  Take a look at the money you have for money beyond your basic necessities. Some items on that list may include: restaurants, movies, concerts, DVD purchases or games. You can forego some or all of these items for a few weeks and reroute the money to your holiday savings account.


Coupons offer an excellent way to save money for your holiday shopping. Clip coupons and save flyers from local newspapers. In addition, ask for discounts at places where you shop. You can also visit the websites of your favorite stores, restaurants, entertainment venues, and service providers. Get on email notification lists and have the coupons sent directly to your inbox.

Start Shopping Early

Everyone can reduce the anxiety associated with holiday shopping, Christmas expenses and gigantic credit card bills by starting as soon as possible. Many people already have this down to an art– starting as soon as New Years’ day. Although you don’t have to go to this extreme, avoid the crowds, long lines and improve the odds of finding the items you have on your list. Draw a line through each purchase to keep track your progress.

Gift Exchange

Even if you limit how much you spend on gifts, the costs can add up quickly, especially if you have a large family. Consider the idea of having a gift exchange. The concept can help out everyone’s budget by eliminating the need to purchase gifts for a long list of family members. Decide on a dollar limit, gather the family and pull names.

Each person participating in the drawing receives one gift. Encourage participants in the drawing to come up with gift ideas that go beyond the ordinary, such as tickets to a sporting event, gift certificate to a preferred eatery, or hand-made knitting.