Last year shoppers told Consumer Reports they planned to spend an average of $699 for the holiday season. In a follow-up survey, however, these same consumers confessed they spent an average of $811 -- 16 percent more than planned.
A little discipline, planning and research can help you avoid overspending and steer clear of a January hangover from credit card bills.
Here are 10 tips to lasso your holiday spending.
1. Create a realistic budget.
Plan before you spend. Take a look at your regular monthly expenses and see how much money is left over after you pay those bills.
Based on your regular expenses, figure out how much you can afford to spend on holiday gifts.
Before you step foot in a single store, make a list of those you plan to buy for and include the dollar amount you want to spend. Without a guide, you'll be more likely to spend too much in the heat of the moment.
Include more than just family and friends on your list. Remember to budget for tips and other gifts to professionals, from the mail carrier to your hairstylist, if you usually do something to show your appreciation.
Try this holiday budget work sheet for some help.
3. Remember the extras.
There are plenty of items we forget to add to the budget. Make sure you include:
- Holiday cards
- Postage
- Decorating costs
- Holiday party expenses
4. Talk to your family.
If your gift-buying list is longer than your budget can handle, it's time to make changes.
Start by talking with your family and close friends. In this economy, money is tight for just about everyone, so chances are good that they'll welcome the idea of paring back or setting limits.
Suggest the adults in the family skip gifts this year and have a special dinner instead. If people feel the need to buy, try a "Secret Santa" or "Secret Snowman," in which family members draw a name from a hat and buy a gift only for that person within a certain price range.
Or consider a charitable holiday. Instead of gifts, make a donation to a favorite charity in each other's names. Your donation will give you a tax deduction, too.
Looking for deals online is a great way to set up your shopping trip. Use price comparison web sites such as PriceGrabber.com, ShopZilla.com and Shopping.com to find the stores with the best prices for the products you want to buy.
You may want to buy online rather than go to a store, but pay attention to shipping prices to make sure you get the best overall price for an item. Many sites ship for free, but others pile on per-item shipping fees. Be sure to search for online coupons through sites such as couponmom.com for additional discounts. (This recent SecondAct post offers some handy links to discount sites.)
6. Pay cash.
One way to make sure you don't overspend is to leave the plastic at home. Credit cards make it too easy to spend more than you planned (and chances are you'll end up paying interest, too, if you can't pay the balance in full come January). Pay cash instead. When the money is gone, your spending power is, too.
7. Track your spending.
Keep a record of every dollar you spend on gifts. Receipts can be a pain to catalog, so take along a small notebook on your shopping trips with your gift-giving budget list. If you find you've gone over budget for Uncle Leonard, maybe you can get Aunt Marianne a somewhat less expensive gift.
Keep a calculator handy so you can balance your budget and reallocate resources as you shop.
8. Shop early.
You'll have more time to comparison shop, take advantage of sales and think about what you want to buy and at what prices.
Those who get caught in a last-minute buying frenzy tend to spend more, which means you're more likely to blow your budget.
A recent study by marketing company Acxiom found two out of 10 consumers don't start their holiday shopping until December, spending some $23 billion in a panic-ridden spending spree.
As you shop, you'll see lots of big-ticket items for sale. To tempt consumers to buy items too expensive for cash deals, retailers offer financing deals. This sounds appealing: "Zero percent interest for 12 months!"
Before you sign on to those deals, you need to understand that for most, the interest accrues each month. If you are late or miss a payment, you'll owe the entire amount of interest from the time of your purchase.
10. Plan now for next year.
Most banks and credit unions offer special accounts earmarked for holiday spending. Start saving in one of these so-called "Christmas Club" accounts today so you have a nest egg for next year's spending. You can arrange to have a certain dollar amount automatically moved from your checking account to a holiday account each month so you don't have to think about it.
It doesn't take much: $10 a week will be $520 in a year; $25 a week will be $1,300.
What are your favorite holiday saving strategies? I'd love to hear about them. Please leave your comments below.
Read more: SecondAct's Holiday Gift Guide
.