AARP - Segunda Juventud - Guilt Free Holiday Spending

The Gift of Giving
Guilt-Free Holiday Spending

By Jodi Lipson
December 2005/January 2006

Yes, it’s possible to get through the December holidays without overspending—and without becoming a Scrooge.

To avoid overspending and debt, say experts, start by making a list.

“People get caught up with the holiday season and giving,” says Rebecca Stiehl, president and CEO of the InCharge Education Foundation, whose Dinero Hispano website offers personal finance education in Spanish. “Figure out how much you can afford to spend.”

Santa makes a list, too, but he has funds aplenty to reward everyone who has been good. Ordinary consumers will want to budget for gifts as well as clothing, travel, entertainment, decorations—right down to the gift-wrapping and postage. Then armed with your list, you’re ready to shop.

Most experts recommend paying in cash when possible. “Resist using credit cards,” says Daniel Peña, director of Hispanic education for Springboard, a nonprofit consumer credit management company in California. Shoppers tend to spend more with plastic than they can afford, even if they plan to pay off their cards each month. If they don’t, fees and interest mount swiftly.

Not surprisingly, holiday gift buying is the number one category in which Americans overspend each year, according to InCharge. But remedies abound.

• Give gifts from the heart. Peña’s extended family exchanges cookies. At first, relatives were wary of the new tradition, but five years later, even Peña’s three-year-old loves to help bake and decorate. Other frugal but heartfelt ideas: create a family photo album, recipe book, or calendar. Offer to baby-sit or mow the lawn.

• Pass on family heirlooms. Those memories gathering dust in your attic make invaluable gifts.

• Give out of joy. Once you start giving, it can be hard to stop, but it has to halt somewhere. If you see someone and you don’t have a gift, “don’t worry, they’ll get over it,” says Peña. “Don’t allow last-minute shopping. You’ll start buying for everyone.”

• Start early. Pre- and post-holiday sales offer huge discounts. And find great buys in January!

You may not stick to your plan perfectly, but keeping within—or even close to—your budget can become a gift you give yourself.

To simplify holiday budgeting, try using worksheets such as those found at Bankrate or SmartMoney.

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