[This article originally appeared on AOL Shopping in December 2007.]
Think back to last January, when you opened up your latest credit card bill and felt overwhelmed by the massive amount you spent on Christmas gifts and other holiday expenses. It was pretty shocking, right? Well, take that feeling and feel it again prior to doing your Christmas shopping this year.
It’s easy to walk into a store with one product in mind and end up walking out with multiple bags of spontaneous purchases. Whether it’s the effective marketing of the stores you visit, or your own personal craving – you are up against strong forces when you go shopping.
Take control of your finances this Christmas by planning ahead of time.
Prior to visiting any stores, grab a pen and paper and write out a simple budget. Figure out how much total money you have available for gifts this year. Write down the names of everyone you want to buy gifts for (the most important ones first, like family and close friends). Do a quick calculation on how much, according to your overall spending limit, you can spend on each person. If you’re satisfied with that amount, that’s great. If the number is too small, then either drop people from the bottom of the list, or stagger the amounts so that you’re spending more on some people and less on others.
Once you have a final list of all the people you’re buying gifts for and the amount you can spend on each gift, you’re ready to go shopping.
On your way to the mall, stop by an ATM and withdraw the total amount of cash allotted for gift shopping. Using cash is key, as you are more careful with each purchase. Using cards – be they credit cards or check cards – makes purchases psychologically less painful, and thus easier to spend more than you planned. (Don’t buy into those Visa commercials discouraging you from using cash. THEY JUST WANT YOUR MONEY! Visa is not looking out for your best financial interests.)
As you shop, know your limit. Shop carefully for each person on your list. Go from the top of your list down. And when the cash runs out, STOP! Appreciate the gifts you were able to buy and feel good about the fact that you didn’t jump into a financial holiday hole.
Shop smart this Christmas with cash and a budget!