Home cloth&decor 10 Scary Common Financial Mistakes to Avoid Around the Holidays

10 Scary Common Financial Mistakes to Avoid Around the Holidays

by recipientme

The scariest time of the year is here – and no, we’re not only talking about Halloween.

We’re talking about the holiday season and all the tempting shopping deals that come with it. The National Retail Federation predicts shoppers on average will spend a whopping $1,007.83 on gifts this year. If this chills your bones, you’re not alone – 47% of Americans dread the thought of how much they’ll spend during the festive season.

Avoid these common money mistakes so you don’t face financial fright this holiday season.

 

Don’t Let These Common Financial Mistakes Ruin the Holidays

Mistake #1: You Don’t Set a Budget

Not setting a holiday budget is one of the most common financial mistakes.

The giant inflatable pumpkin that once seemed gaudy and pointless suddenly becomes a must-have amid the excitement and glam of holiday shopping. Then, before you know it, you’re putting holiday gifts on your credit card, and “one more present for cousin Timmy” is just a tiny drop in an ever-expanding ocean.

The endless sales during the holiday season don’t make it easy either and spending mistakes affect personal finance.

Remember why you made a budget in the first place: to stay on track and meet your long-term goals.

Follow our three-step strategy for a budget-friendly holiday:

  1. Write a list of every single person you need to buy gifts for.
  2. Avoid one of the biggest holiday mistakes and set a maximum overall holiday budget and then allocate a budget for each person on your list (for example, $100 each for the important people, like mom and dad, and $10 for work colleagues or distant cousins).
  3. Research gifts online within your person-allocated budget and be strict.

Mistake #2: You Don’t Stick To Your Shopping List (Or You Fail to Write One At All)

Without a list, holiday shopping can fast become a game of how many items you can fit in your cart. Those little last-minute gifts might seem small – 50 cents here or a couple of dollars there – but it all adds up.

It’s easy to forget what you’ve already bought and it can get difficult when a coworker who we didn’t account for buys us a present.

This is why it’s vital to write a list and stick to it.

Those extra gifts might seem tempting, but will they really make a difference in the long run? Will Janet from accounting really be devastated if you don’t get her a box of chocolates to say thanks for her dollar-store gift?

Mistake #3: You Don’t Save Money Ahead of Time

Imagine having no savings and needing to buy hundreds of dollars worth of gifts for friends and family.

This is a surefire way to end up in the red at the busiest time of the year and will make recovering from financial mistakes difficult. To avoid this scary scenario, start saving in advance.

You don’t have to set aside much, but every little bit helps.

If you set aside just $83 each month, you’ll have almost $1,000 by the end of the year. That can pay for all your gifts and other expenses that the holiday season incurs without you having to max out your credit card.

The trick here is to make budgeting a mindless, automated task, rather than an afterthought. Don’t have the time to sit and work out new budgets every month? You don’t have to. Use Empower’s Autosave feature and let the app do the hard work. It’ll even give you savvy financial recommendations. Or try Dosh, which can earn you cash back when you do spend or dip into your credit card.

Empower is a financial technology company, not a bank. Banking services provided by nbkc bank, Member FDIC.

^ Eligibility requirements apply.
* Deals will vary and must be selected in the app.

Mistake #4: You Fall Foul of Tempting Deals

In the lead up to the holidays, there are plenty of shopping events that reveal common spending mistakes, like Black Friday and Cyber Monday. Mind-boggling deals are the flavor of the season and it’s easy to get sucked in by huge discounts.

And, with megastores like Walmart set to be closed this Black Friday, more shoppers than ever will be turning to the internet to satisfy their shopping sweet tooth and, as a result, will fall foul of the most common financial mistakes.

To avoid giving yourself a fright when you go to checkout, the solution is to plan ahead.

Write down what items you need and stick to your list. It’s a great idea to buy things when they’re on sale, but only if you need them in the first place. Otherwise, you’ll end up with a house full of impulse buys and no money left for the rest of the holiday season.

Mistake #5: You Spend Like You Won’t Need Anymore Money After The Holidays

If you’ve drained your bank account during the holiday season, you’re going to have a very miserable start to the New Year.

Don’t lose sight of what’s on the other side of the festivities. Expenses don’t stop in January and your long-term financial goals won’t be as forgiving when the cheer has ended and life has returned to normal.

It’s worth setting aside money for January during the holidays so you’ve got a little leftover.

Mistake #6: You Don’t Shop Around

Impulse buys are one of the most common spending mistakes during the holiday season.

We see something we like, we buy it – simple. But unpredictable buying like this adds up over time and creates spending mistakes that hinder our personal finance.

Remember, something is only a good deal if it fits your budget and you need it. Having your holiday shopping list handy at all times will help you avoid the majority of money management mistakes that crop up in the holidays.

As you work your way through it, research where you can get the best deals and see if you can find any discount codes in advance.

Even if you only save a dollar or two on each item, you’ll make significant savings in total and will make recovering from financial mistakes that much easier.

Mistake #7: You Start Too Late

We all know someone who brags about completing their holiday shopping in September. Without holiday shopping hanging over their heads, they’re free to enjoy the season without worrying about money or panic-buying last-minute Thanksgiving decorations.

Be more like these people. Start planning your holiday shopping well ahead of time and get organized. Give yourself a schedule for the months leading up to the holidays so you know what you need to buy and when you need to buy it.

Deadlines can be a great help here. For example, you might set a September deadline for Halloween decor and an October one for stocking up your pantry for Thanksgiving.

Maybe you’re someone who prefers having their deadlines right at their fingertips. Keeping your lists and schedules on your phone, so you’re always on-track even when on the go.

Using organizational apps like these may just do the trick: Todoist, Tick Tick, Things and OmniFocus. And if you’ve ever been a fan of the coveted Wunderlist, well now it’s called Microsoft To Do; it’s newly improved and highly rated.

Mistake #8: You Splurge Too Much On Yourself

In one survey, 22% of Americans admitted to buying themselves gifts over the holidays – and why wouldn’t they? If we see a little something we like and there’s a hefty discount tacked on, of course, we’re going to want to treat ourselves.

But these little personal gifts can add up and take a chunk out of your holiday budget. We have a three-step strategy to help:

  1. Wait seven days after seeing something you like to decide whether you actually want to buy it.
  2. Decide whether the product fits into your holiday budget. Can you afford to cut back elsewhere or tighten your budget on other expenses?
  3. If it doesn’t fit into your budget, set up a savings plan to get the money you need to buy it.

Mistake #9: You Don’t Budget For Other Holiday Expenses

It’s not just gifts that cost money this time of year; there are spooky costumes, expensive dinners, decorations, and cards too.

These extras should all fit neatly into your holiday budget so there are no nasty surprises. When you’re setting your budget, be sure to add columns for other activities and items you might need.

For example, you might also set a total budget for food, a total budget for drinks, and a total budget for travel. Having columns for different expenses will ensure you avoid any holiday mistakes.

Mistake #10: You Turn a Blind Eye to Other Financial Priorities

It’s easy to forget about other financial commitments you have during the holidays.

According to one survey, 1 in 4 Americans is still paying off credit card debt from the previous holiday season, while another report shows that 61% of people with credit card debt are willing to add to their balances during the holiday season.

Don’t let one season draw you back into money management mistakes. Finding a balance is absolutely vital so that you can cover your regular monthly expenses and other financial obligations before you start swiping your credit card.

 

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