Three Financial Tips for Holiday Gifting

Mary Grace Paoletti, CFP®, CPA, Financial Planner

With the holiday season quickly approaching, it is the perfect time to start planning your family gatherings, shopping list, and most importantly your budget. Having a plan and sticking to a budget can help you to avoid buyer's remorse as you enter the new year and look back at how quickly your holiday expenses have added up.

Holiday gifts wrapped in brown paper under Christmas tree

According to a study by Deloitte, Americans are projected to spend an average of $1,652 on various holiday expenditures this year. Contributing to this number is the dramatic increase in price for holiday staples such as toys and gift wrap.  As you embark on holiday shopping this year, keep these helpful tips in mind… 

1. Make a Budget. 

Whether we are talking about goal-setting, dieting, or budgeting—writing it down is crucial. Studies have shown that when you document your goals on paper, you are 42% more likely to accomplish them. A weight loss study of 1,700 participants showed that the individuals who kept daily food records lost twice as much weight when compared to those who didn’t. When making your budget, be sure to allocate your funds to separate categories such as gifts, food/entertainment, decorations, travel, etc. It can also be helpful to set a specific budget for each person on your list so that you don’t fall victim to impulse buying and spend a disproportionate amount on some of your loved ones. If you find that your budget is being stretched in one or more of these categories, brainstorm different ways that you can avoid overspending. For example, have loved ones over for dessert instead of a full meal, or ask each person to bring a dish with them. If airfare is too expensive, consider traveling after the holidays when prices usually come down or perhaps consider a road trip instead of flying.   

While using cash instead of credit cards is an easy way of ensuring you don’t overspend, this also means that you lose out on the credit card points that many companies have to offer. An alternative to this is to set your own personal spending limit on your credit card. If you have 2 or more credit cards, you can use one solely for holiday expenses and set a limit on it so that your credit card company will notify you once you hit that limit. 

2. Take Advantage of Price Matching.  

Be sure to research the best prices available for each item on your holiday shopping list and know the best places to buy them. Best Buy, Target, and Dick’s Sporting Goods have some of the best price-matching policies of all the major retailers. Best Buy will price match any of their 19 “Qualified Competitors” which includes notable retailers such as Amazon, Target, and Walmart. Additionally, if you buy a product at Best Buy between October 27th and December 30th and Best Buy drops the price at some point during that period, you can ask for the lower price to be applied to your purchase up until January 13th. Be sure to save your receipts and keep an eye on prices even after you buy your gifts! 

Target has a similar policy but matches up to 30 competitors and their price guarantee window ends a bit earlier on December 24th. Dick’s also has a long list of competitors that they will match which includes Amazon, Walmart, Kohl’s, and many more. Fortunately, we live in the age of smartphones which make it possible for you to pull up a competitor’s price in a matter of seconds while on your way to the checkout lane. 

3. Consider Alternatives to Traditional Gifting. 

If you have any hidden talents or interesting hobbies, consider homemade gifts as opposed to store-bought items. In most cases, your loved ones will recognize the time and effort you put into the gift and appreciate it even more. Group gifting is becoming a more popular option as well. Go in on one big gift with several other people, instead of each of you buying something small. If your children are now adults and you typically give them money instead of store-bought goods, talk to your advisor about how gifting stock may be more beneficial for you and for them.  

Save yourself time and money this year by planning ahead and being mindful of where and when you do your shopping. Most importantly, don’t let the shopping and stress of the holiday season become your main focus. Enjoy the time with your family and friends and have a wonderful holiday season! 

Mary Grace Graniero

Mary Grace is a Certified Public Accountant and CERTIFIED FINANCIAL PLANNER™, responsible for working with clients to achieve both short-term and long-term financial goals.

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