Newswise — American consumers have a lot of challenges this holiday shopping season. For many, the most important challenge can be spreading holiday cheer and giving gifts without overspending on an already tight budget.
"Holiday spending will put a big dent in most people's budgets because when they budget annually for such gifts, they usually don't reserve enough for the December timeframe," says Caroline Fulmer, assistant professor of consumer sciences at The University of Alabama. "For most of us, unless we set aside a special Christmas savings account, holiday spending causes us to tighten our belts on other expenses."
Ideally, the time to start a holiday budget is in January, just after the holiday season. Fulmer advises setting a spending limit and gradually building it throughout the year.
"If you want to spend $1,000 on gifts among family and friends, you should try setting aside $80 to $90 a month beginning in January so you have enough money when November arrives."
There is a way to alleviate the strain of holiday expenses now, but it will involve making decisions about what's important to you and your family during November, December and even January. Fulmer suggests cutting back on the extras like dining out, entertainment, and extra clothing, then spreading that money among holiday purchases.
Most important, don't overspend. The wish list can't always be fulfilled in its entirety. The best solution for immediate relief is being more thoughtful in the gifts we give, Fulmer says. Rather than making the usual purchases from a department store, Fulmer encourages giving gifts that are high in value and low in cost.
"Now is the time for consumers to focus on the thought and spirit of the season, not the amount of money," Fulmer says. "Look for those things that are special. A friend of mine is gathering all of the old family photos, scanning them, and creating a photo album. She saves money by using her own computer, and she is making a gift that is priceless to her father."
Sometimes, you just overspend. How do you get back on track? Look for those places in your monthly expenses where you can carve out unnecessary purchases. Meet your needs while avoiding those things that you want. Again, dining and entertainment might get cut from the monthly budget, but it allows more financial flexibility next holiday season.
Fulmer includes a few more suggestions of gifts that cost time, not money.
Certificates for extra chores around the house Babysitting and carpooling the kids A thoughtful letter to close friends and relatives