Just like a food diet that helps you watch what you eat, a spending diet helps you manage what you spend. Last year a poll conducted by American Research Group showed that Americans planned on spending an average of $431 on Christmas gifts.  However, intentions are not the same as actions. In evaluating the difference between what people said they were going to spend and what they actually spent, Catherine Rampell, Economics Editor for the New York Times, said, “Consumers may say they’re going to spend less [this year], but they buckle when they actually hit the mall.”

So how can you make a reasonable shopping budget and stick to it? Below are some actions you can take on your spending diet which will make this holiday season more enjoyable and less expensive.

Get organized

First create your own budget and see how much money you have available to spend on holiday shopping. It may not be very much and that is okay. Having an enjoyable holiday season does not mean it has to be an expensive one. What do you enjoy about the holiday season? Visiting with friends and family, singing carols or holiday songs, enjoying a good meal? Some people spend an evening driving or walking around their neighborhood looking at the decorations. 

Make a list of everything you want to buy this season; decorations for all the upcoming holidays, gifts, costumes and special foods. Now review your list and find items where you may be able to cut back. If you plan on having a dinner party at your house, could you make it a potluck instead? Could your children make decorations rather than purchasing new ones from the store? Really evaluate whether or not the items in your list are necessary for enjoying the holidays.

Impulse spending

Leave your credit cards at home and pay cash when you go shopping. Credit cards make it easier to spend more than you budgeted. According to research conducted by Dunn and Bradstreet, people spend, “on average, 12 – 18% more when making a purchase with a credit card as opposed to cash.” When the cash is gone you are done shopping.

Stick to your list. If you have trouble saying no to sales or “good buys”, avoid going to the store without a list or a reminder of what you know you can afford. If only certain stores cause temptation, try to avoid those completely.  Finally, take a notebook with you when you shop. Jot down the items you purchase and the amount of money you have spent. This will help you stay within the limits of your holiday budget.

Reduce the obligations

If you typically purchase gifts for extended family and friends, think about ways to change that tradition. Talk to them about limits on spending, drawing names, simply exchanging cards, or having a get-together instead. Chances are they would like to reduce their spending as well and would appreciate the suggestions.   

Be realistic

Many people feel the need to spend a lot of money on gifts for their children in order to show them that they love them. Others worry that telling kids there is a limit to the amount of money spent on gifts or that they need to scale back the holidays will cause the child to worry about the family’s financial situation. In reality, parents are a child’s primary financial teacher and holidays are a perfect opportunity for learning about budgeting.  However, rather than explaining that they’ll receive less gifts this year due to money constraints, let them know that you’d like to have a simpler holiday. Emphasize being together as a family and creating new, fun memories.  Perhaps spend an evening together baking holiday treats as gifts for friends and neighbors.

Finally, remember, you do not have to accept every invitation to a party, or buy the biggest and the best gift to show someone you care about them. Just like eating a well balanced meal will keep you healthy, a well balanced budget will keep you in solid financial shape.

1. Question your spending: Ask yourself how much you are willing to spend on each item. When I am tempted to splurge on an item, I ask myself how many hours I worked or will have to work to pay for that item, vacation, or meal. When I realized that I had to work two hours to take my family of seven out to dinner at a fast-food restaurant we stopped eating out. There are a lot better uses for my money.
2. Look for free fun: Need an alternative to shopping, dining out, or going to the movies? Expand your options! Talk a walk or bike ride with friends. Go for a picnic instead of eating at a restaurant. Have clothing exchange party – everyone brings some things they don’t wear anymore and you see if you can trade. Your friends may be relieved to hear your less expensive alternatives for having fun.
3. Follow the crowds: While major department stores are hurting from the downshift in the economy, discount stores are holding steady. Look for discount grocery stores, clothing stores, and other discount chain stores such as Wal-Mart and The Dollar Store.
4. Save on food: Pack your lunch and avoid the latte factor. One latte at $3.50 a day works out to, approximately $910 a year. Treat yourself to one latte per week and tuck the savings away. Also, when you go shopping make a list and stick to it!
5. Taxes: Don’t overpay your taxes – why would you want to loan your money to the government when you could be earning interest on it. It is better to accurately adjust your W4 so that you will only receive a minimal refund and save the extra you would have paid throughout the year. You can also save the smaller refund!
6. Raise your insurance deductibles: If it is viable for you to do this, your premiums will go down and you can save the difference!
7. Keep things interesting: Start savings all your quarters or better yet, your $5 bills. Pick a different unit of money every week or month and watch your savings grow!
8. Save extra or unexpected cash: When you receive a monetary gift, tax refund, raise or bonus don’t be tempted to spend it – invest it. When you finish paying off a loan, continue investing that same amount of money into your savings or investment account.
9. Save energy: Turn off and unplug items you are not using; replace incandescent bulbs with fluorescent bulbs; switch to cold water for laundry; buy Energy Star certified appliances.
10. Look for savings opportunities: Track your spending for one month and determine what you spent on needs and what you spent on wants. Eliminate some of those wants and put the money into savings.

In my home we keep our gathering very casual. We are all about comfort, being together and of course, sharing a love for football.

Family members bring side dishes and beverages to ease the cost of our feast. Dinner time is always at halftime. One thing I am very grateful for is that the children do the dishes.

After the day is over and the family is gone, I shop online for Black Friday deals! In recent times, the day after Thanksgiving Shopping has been referred to as Black Friday because it is the first period in the year that retailers begin operating in the “black”. Black of course is the color used in accounting to show positive accounting amounts.

BLACKFRIDAY.info is a great place to find all those Day-After-Thanksgiving Sales, and there will be many this year. FatWallet.com also offers some great deals but the real beauty is that you earn a percentage of your total purchase by ordering online.

Get Organized: Take an afternoon and assess each child’s clothing needs. Empty drawers and closets of outgrown or worn-out clothing, and either store or donate the discards. Working with your child, clean and organize clothing storage before new garments are added.

Create a Needs List: Develop a wardrobe needs list for each child filling in the gaps of the acceptable clothing they already have. Check for possible hand-me-downs from older siblings as you make your list. Stick to your list.

Be Prepared: Get a classroom supply lists before shopping for school supplies. Do shop early for supplies! With back-to-school sales beginning in mid-July, late shoppers have a tough time locating needed supplies among September’s Halloween costumes and Christmas decorations.

Create a Budget: Use this as an opportunity to teach budgeting skills. Tell your kids how much money you have to spend, and let them participate in the decision-making process. Even young children understand the concept of money. Older kids can be given a clothing allowance for them to spend as they wish. Anything they want over and above their allowance should be paid for by babysitting, mowing lawns, etc. Creating a budget together will also help prevent in-store disputes.

Shop Thrifty: Shop thrift stores and resale shops. Jeans, jackets, shoes, and shirts can be found for $1-$5 per item at your local Goodwill or Salvation Army. Many times shops like these even have half-price or bag days where you can save even more. If you shop frequently, you most likely will be able to find the brand names your kids are looking for. Resale shops like Plato’s Closetare also a new trend — they specialize in the desired brand names tweens and teenagers are searching for. No one will ever know that their “new” Abercrombie sweatshirt was second-hand!

For more money saving tips or ideas on talking to your kids about money visit our website at http://www.myfinancialgoals.org/.