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Smart Spending During the Holiday Season

November 14, 2008

By: Jim Oosterman
Melrose Bank

Worries about the economy this year might be weighing on your wallet. Now that the holiday season is just weeks away you’re probably wondering how you’ll be able to enjoy shopping and give gifts on your already tight budget. But there are some ways to keep your spending in check and avoid a mountain of debt after the new year.

Make a list and check it twice
You should have at least a couple of different lists to prepare for holiday shopping. One should map out all of your holiday season financial commitments, aside from gifts, so that you can set a budget. If you’re hosting a Christmas party, then you’ll have to plan on spending money for food and drinks. If you’re going to travel to visit relatives, figure in gas, meals on the road or whatever costs are related to your trip. Include the cost of holiday cards and postage.

Once you have those numbers in front of you, you can realistically determine how much you can spend on gift giving. Assign a maximum dollar amount to each person on your gift list. To make it even easier to keep track of how much you spend, you can put that amount into a separate envelope for each person.

Make a list of gifts to buy and follow it when you shop. If you stick to that list, you’ll be less likely to spend extra money on unnecessary items or something that might be more expensive than you can afford. Check people off your list as you buy their gifts, and don’t look back! It’s very tempting to buy “just one more thing,” or find something “better” than your original purchase, but that’s one more way spending can spiral out of control. Also, resist the impulse to shop for yourself.

The earlier in the season you can start shopping, the better. Sometimes a last-minute dash to the mall or buying all your gifts in one day can lead to purchases you’ll regret later. Spreading your purchases over a longer period of time also will be easier on your bank account. While you’re shopping, take a break to evaluate your progress. If you’re spending more than you thought you would on that day, it might be a good idea to stop and continue after the next payday.

Cash or credit?
One of the biggest pitfalls in holiday shopping is overuse of credit cards. Use cash or your debit card as often as you can. Sometimes spending “real” money up front can be enough to keep you in check. To help with that, consider opening a separate holiday savings account at your community bank. A small amount of money saved each payday will not seriously impact your household budget and will add up to a good sum to spend at holiday time. If you must use a credit card, use only one, and keep close tabs on how much you charge.

It’s the thought that counts
Despite the pressure you might feel to give the perfect store-bought gift, maybe this is the year you consider some more creative ideas. Is there a particular photo you have that friends or family might like a framed copy of? Could you offer to cook a special meal or baby-sit for someone on your list? Thoughtful alternatives are appreciated during the holiday season by both the recipient and your wallet.

More quick tips to control holiday spending

  • Check online for some of the gifts you want to buy to compare prices. Sometimes even if you have to pay for shipping, you can save money by not purchasing those items in a retail store.
  • Simplify your family’s Christmas stockings by not filling them with anything that costs more than five dollars.
  • Avoid buying anything on sale just because it was on sale.
  • Keep your receipts so you can return anything if you change your mind.
  • Buy wrapping paper and decorations at after-holiday sales and use them the next year.

As with any aspect of financial management, planning ahead is the key. You can prevent ringing in 2009 with a pile of bills if you have a well thought out plan of how you will spend your money. The tips outlined here will minimize some of the stress and frustration that could keep you from enjoying an otherwise festive season.

James Oosterman is the Vice President of Melrose Bank. He can be reached by telephone 781-665-2500, online at or on Facebook at

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