This holiday season, are you spending within your means?

This holiday season, are you spending within your means?
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Like most of you out there, I’m only human when it comes to spending around the holidays. I’ve been amazed over the past couple of years at the number of emails I get telling me about the latest deals around this time of year. Don’t get me wrong, I love the holidays but I made a pact with myself this year to spend within my means. I don’t want to get myself into a situation – one that I have to admit I’ve been in before – where I’m dreading the arrival of my credit card bill come January.

With all the enticing deals leading up to the holiday season, it is tempting for all of us to spend beyond our means. I’m just not sure how to avoid the temptation and stay on track. In order to make a step in the right direction, I decide to create a budget and track my spending on my first Christmas shopping excursion.

A day at the mall…

Like most years, I go down to my local shopping mall in the hopes that I can finish all of my holiday shopping in one fell swoop. I’ve decided to start this a bit earlier than normal so I can take advantage of a lot of the Black Friday deals that Canadian retailers have started to do. In an effort to manage my spending and budget, I’ve made a list of everyone I want to buy a gift for and also brought along some of the flyers I got in the mail that peeked my interest.

As soon as I walk into the mall, some of my shopping conservatism goes out the window. There are salespeople coming at me from all directions – even before I walk into the store I’m interested in visiting. They are telling me about this deal and demonstrating all the new (and shiny) products. The next moment I’m at the cash register forking out $400 and I can’t even remember what I came into the store for in the first place. This incident repeats itself – although in a smaller scale – at a variety of other shops in the mall. The only thing that stops the routine of it all is my need to drop some of my purchases in the trunk of the car.

Maybe it’s the blast of fresh air or the absence of Christmas music but six small words come into my head – “How much did I just spend?” I frantically look at my receipts – $400 here, $100 there, $250 etc, etc. Not a single or double digit receipt to be found. Whether or not I can afford this excess, it really doesn’t matter. The fact is my good, budgeting ways went out the window as soon as I got into the shopping zone.

And I’m not alone…

In 2011, it was reported that the average Canadian spent $1,400 during the holidays. Approximately $600 of this was on gifts alone. It’s one thing if this was during a boom time in the economy but haven’t we been in challenging times the past few years? Spending beyond our means – I guess is something quite common for many of us at the holidays.

Personally, I think that part of the issue is the type of gifts we’re buying these days. When I was a kid, I never dreamed of getting a Christmas present that was worth over $700. Nowadays, that’s what many kids get when they awake on Christmas morning to find the latest laptop or tablet computer. There’s no wonder why we’re all finding it hard to cope when the simplicities of the holiday season are being replaced with these price tags.

After my shopping spree, I started to reflect on why I spent so much in such a short space of time. First of all, I was initially attracted to getting good deals on the Black Friday weekend. Most of us think that if we want to save money, finding a great deal on our holiday wish-list can be a great idea. What we fail to think about is that those same stores that are offering door-crasher prices need to make money. So, they’ll lure me in for that great deal but try to get me to buy more – leading to my overspending and obvious impulse purchasing behaviour.

Another factor that contributed to me spending more than I bargained for – pardon the pun – was the volume purchase discounts. Although it’s great to get three items for the price of two, do I really need them? I wasn’t sure even after I took my purchases home. I then thought that – in reality – I could have just purchased one of each of the items and called it a day. Sure, I wouldn’t have got the free item but if I didn’t really know who I was going to give it to as a gift in the first place, why waste the extra money. When I had the time to think about I realized that part of the retailer’s strategy here is to move their inventory. So if they are offering discounts on volume purchases it’s probably for a reason and I need to purchase with caution.

Shopping malls also create an environment where you get into the mood for spending money. Everyone around you is doing it and it actually feels like fun. The malls are decorated to give you that Christmas cheer, Santa is there encouraging you to buy and the music is getting you into the festive spirit. So, it’s got all the perfect ingredients to make you feel at ease as you shop. So, I think, maybe next year I’ll just buy all my purchases online. Well, maybe that won’t help much. The Canadian Association of Insolvency and Restructuring Professionals highlights that the ease of buying online makes it likely that trends in over-spending will continue to rise.

So, what do I do? How do I enjoy the holidays and spend within my means for real in the future?

The best way to do this is to follow five pieces of advice –

  1. Make and stick to a budget
  2. Make and stick to a shopping list
  3. Take the time to do your research (about how to get the best deal)
  4. Plan ahead for unexpected circumstances by saving (i.e. loss of a job, unexpected bills)
  5. Pay cash

It appears that I did some of this but didn’t do enough to follow it through. It’s great that I thought ahead about what I wanted to buy and how much I could spend. However, if I don’t actually stick to that plan it’s not going to help me really when it comes to paying the bills.

Since I still have a few weeks before the holiday season arrives, I luckily still have some options for managing my money. Most stores offer a return or exchange policy so there is always that option if I feel that I could spend my money better. One of the goals I had this holiday season was to spend within my means. Now it’s time for me to put this into action in 2013 so I can enjoy the holiday season debt-free!

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