Although there’s usually no single day of transition, it often seems as though the world goes from summer to autumn overnight, with leaves turning a bouquet of colors almost before our eyes. While not nearly as lovely, a similar transition happens in retail this time of year — one that is often literally an overnight transformation.
Yes, we’re talking about the magical day after Halloween when retailers of all types shed the remnants of their end-of-summer sales and fall decor to put on their full holiday splendor. What were, just the day before, aisles of Halloween candy and costumes, overnight sprout boughs of holly and the multihued cacophony of thousands of packaged ornaments.
Of course, it’s little surprise that retailers are so eager to get the holiday shopping season started. The so-called Golden Quarter is the peak of the retail year and, for many, the time when the bulk of their profits are made. In fact, consumers are expected to spend an estimated $1 trillion in November and December, with an average of $1,250 per person spent on gifts, travel, and entertainment.
Given that your holiday spending could very well end up being more than a mortgage payment, it’s important to get a handle on your finances well before you start swiping your way through holiday sales. With a little preparation and planning, you can ensure your finances make it through the holidays and into the new year.
1. Know Where You Stand Before You Start Shopping
To begin with, you need to know where your finances stand before you go throwing them a big holiday spending curveball. This means looking at your various bank accounts, current credit card balances, and other sources of debt to get a complete picture of how much money you can reasonably spend on your holiday shopping.
If you already have a budget — one that you actually maintain — (which, by the way, you really should) then this part is likely fairly simple. Ideally, you’ve already built a holiday shopping budget right into your yearly and monthly savings goals and can simply proceed to the next step.
For the rest of us, however, this step may take a little time. But any time spent now on figuring out a reasonable holiday budget is time (and money) saved down the line when you don’t have to wonder how you’re going to pay your post-holiday credit card bills.
Once upon a time, generating a decent budget would have been the job of a spreadsheet. These days, we have plenty of great digital tools that can be more user-friendly. Mobile budgeting apps can be a huge time-saver for organizing your finances.
Many of the best products can pull the information from your various accounts — bank accounts, credit cards, loans, etc. — and put it all in one place, making it easy to see, at a glance, where your money is — and where it needs to go.
2. Make a List (& Check it Twice)
Never underestimate the power of a good list when it comes to organizing something — including your holiday shopping. In this case, you may actually want several lists (or one snazzy spreadsheet) so you can see how far your holiday budget needs to stretch.
For example, it can be extremely useful to make a list of everyone for whom you’ll need to purchase a gift, perhaps with a note about the general price range you think you’ll spend. This not only helps ensure you don’t forget anyone, but it is also important for making sure you stay within your holiday budget.
If you get halfway down the list and find you’ve already notated your way beyond your budget, for instance, it’s time to re-evaluate who gets gifts — or, perhaps, consider looking into budget-friendly homemade options. If, on the other hand, you make it to the end of the list and realize you have a lot of wiggle room, you can consider splurging a little in other areas.
Holiday meal or travel plans are also good things to list out. A Thanksgiving meal for the whole family can easily pass the $50 mark, and let’s not even get started on the exorbitant cost of holiday travel. In some cases, you may have to settle for giving the gift of yourself if your holiday budget precludes adding a present on top of your travel expenses.
Don’t forget to include secondary costs on your lists. While a single roll of $2 wrapping paper likely won’t break your holiday budget on its own, these things seldom travel alone. In other words, that roll of wrapping paper, two rolls of tape, three packages of batteries, plus a mountain of tissue paper may make more of a dent when they’re all added up on your credit card statement.
3. Build a Strategy to Maximize Discounts & Rewards
With a holiday budget set and your gift recipient list in hand, it’s time to build your plan. Preparation is half the battle, after all, so be prepared!
This can be simple things, like gathering sales ads to compare prices, but it can also mean more in-depth strategizing. For example, most retailers now offer mobile apps that can include exclusive discounts or coupons. If you know you’ll use a particular retailer for some of your holiday shopping, consider downloading the brand’s mobile app to unlock extra deals.
You should also take a close look at your credit cards to see which cards will offer you the best return on your holiday purchasing through purchase rewards. Match each store deal with the card that will offer you the best rewards to ensure you’re not leaving cash back or points on the table. If you have a card that gives you bonus rewards on department store purchases, for instance, be sure to use it for the Macy’s sale you planned on hitting.
Credit card issuer portals are also great ways to find exclusive deals, discounts, and extra rewards on tons of retailers. While most are intended for online shoppers, some can be used in-store, as well. You’ll need to use that issuer’s card to make the purchase for the deal to apply in most cases, however, so make sure the opportunity cost is worthwhile.
And you shouldn’t simply start swiping, of course. You’ll want to check your credit card balances to verify that you have room on your cards for the purchases you intend to make. If your best bonus rewards card has a high balance, consider making an extra payment or two on that card before your holiday shopping to keep your utilization rate low.
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