8 Tips To Control Your Holiday Spending

“Delicious autumn! My very soul is wedded to it, and if I were a bird I would fly about the earth seeking the successive autumns.”

– George Eliot

I love the foliage season and the fall. Halloween is a big holiday for consumers. According to a National Retail Federation’s ( NRF’s) annual 2019 survey, Halloween spending is expected to reach $8.8 billion this year. This is a bit below $9 billion in last year’s rate. Shoppers they will spend an average of $86.27 this Halloween. About 172 million people, or 68% of Americans, plan to celebrate this holiday, slightly down from 175 million last year.

Halloween is not the biggest holiday dollar-wise. Consumer spending is far higher for Valentine’s Day and Mother’s Day. At least this occasion may involve the whole family, including your pets.

Halloween Spending

Among those celebrating, the number one item which  Americans spend their money is on costumes at $3.2 billion, decorations at $2.7 billion, closely followed by candy purchases at $2.6 billion. Actually, one-quarter of all candy sold annually in the US is purchased for Halloween and only $390 million for greeting cards. I don’t recall the last time I sent or received a greeting card.

A startling 37% of Americans planned to start Halloween shopping before October. My guess is that you wanted to settle on your costume or that of your children early on. I recall running relatively late (mid-October and I thought I was early!) to get my kids’ choices. All the great ones (such as Dora the Explorer) were gone. I enlisted a cousin at one of best distributors of costumes. He saved my a** with the perfect princess and super hero costumes. This year, 3.1 million children (7.9%)  plan to wear their favorite princess while 2.4 million children (6.6%) go as their favorite superhero.

Do You Dress Your Pets?

Halloween is rarely scary for the average person. However, for our pets it is a scary time but I am not referring to scary humans but the fact that owners like to dress up our pets for this holiday.There are 29 million people who plan to dress their pets in costumes. For the record, I have never costumed either of my dogs…the leash is challenge enough.

PetPlan, a pet health insurance company, found the week around Halloween to be among the most dangerous times of the year for our favored members of the household. Petplan’s reimbursement for chocolate toxicity treatment during that same week averaged $627. Chocolate, especially darker chocolate, can be toxic for dogs giving them gastrointestinal upset and elevated heart rate. The costumes are alright, unless frilled or with feathers which are potentially difficult to injest. Of course, their self-esteem could take a hit.

How We Spend For Winter Holidays

Consumer spending for the Halloween celebration is comparatively tame dollar-wise. The upcoming winter holidays, which run from Thanksgiving to Christmas, and include Black Friday and CyberMonday, dwarfs all the rest. Consumers plan to spend $1,047.83, up 4% from last year’s plan. Shoppers between ages 35-44 years will spend $1,158.63 this year, according to NRF. These dollar amounts do not include New Year’s Eve or winter vacations.

Given the approaching festivities, it is time for a sound financial plan to spend wisely, make end of year investing decisions and have fun.

8 Tips To Control Holiday Spending And End of Year Planning

1. Use A Shopping List to Plan In Advance

Pull out your list from last year to update for the typical three categories. Those are:

• gifts for families, friends, co-workers, and neighbors;
• non-gift holiday items, notably candy, food, decorations, greeting cards and flowers. If you can reuse decorations, go for it; and,
• other non-gift purchases that we make when we take advantage of deals and promotions during the season. 10-15% of our planned spending is for these items. These expenditures are probably discretionary.

 

2. Keep Track Of Your Spending

Make sure you use a realistic budget and track your spending. If you have a spending plan that is impossible to keep to, you’ll just go off script. Refer to your budget for items that recur every year whether for gifts or holiday dinners. Search online and put items in your cart to prompt follow up discounts from the retailer.

The point of tracking spending is to be more conscious about your purchases so that you can be guilt free and can enjoy the holidays.

3. Avoid Procrastination, Shop Early

Start shopping early so you aren’t forced to buy in a hurry.  Procrastination is costly, especially during holiday shopping. I have often waited too long and found preferred merchandise for loved ones sold out, and ended up spending more than I intended for sometimes inappropriate things. I don’t enjoy shopping in crowds but I don’t like paying more than I should be spending.

4. Have A Plan For Reducing Debt

The holiday times are often stressful. Often that tension is caused by the realization that you will be spending a lot during this time of year. You are not alone. The average credit card debt per borrower is $5,554 in the first quarter of 2019 according to TransUnion statistics.The share of credit card balances transitioning to 90+ day delinquency rates have hit a 7 year high in 2Q19, rising to 5.2% from 5.0% in 1Q19.

Many borrowers are struggling with credit card debt and are not able to even make the minimum payments. The truth about credit cards are that even if you are paying the minimum amounts, the high cost of interest rates on most credit cards are compounding what you owe.

Start a plan during the holiday season that you can commit to even if it means after the holidays. Pay more than the minimum amount owed and work your way toward paying your balances in full every month.Use a budget to keep your spending from going out of control.

5. Be A Savvy Shopper

The holiday season is an especially tricky time to shop. Typically, you are not buying things for yourself. Gift shopping is more of a necessity because we are getting something for family and friends. We feel some guilt looking for bargains for others. Merchants are taking advantage of us during this time. The store is brightly lit and holiday music is being piped in. There is a psychology at work here as most of us feel nostalgia for the holidays which elevates our positive moods.  

Feeling good while shopping makes it hard to resist impulsive purchases. So need to work harder to avoid that feeling. Recognize that not all sales are true bargains and that it is just a sign with the word “sale” on it. Doing your research online or sticking to your shopping list helps.

6. Use More Cash

If you know you will overspend if you use your credit cards, try using cash. It is a good way to keep track of your money for smaller purchases. You will feel pain more immediately and often are more judicious about your purchases.

7. Year-End Tax Strategies For Your Portfolio

While your mind may be on the upcoming holiday season, this time of year is a good time to consider how to efficiently structure your capital gains and losses in your portfolio.

By timing your stock sales correctly, you can lessen your tax burden. If you have some stocks with long term losses, it is a good idea to match the capital losses against your capital gains. The federal capital gain rate is 15% on the stocks you have held for a year and a day. Importantly, if you sell your long term stocks that have losses along with gains you can minimize your tax bill.

If you have an financial adviser, it is a good idea to speak to him or her about selling some stocks. Accumulating capital losses for future stock gains is called tax loss harvesting.

You are not the only one selling stocks with losses at the end of year. Fund managers often “window dressing” that is selling stocks with large losses while picking up high flying stocks at the end of the quarter so their portfolio looks smarter.

8. Charitable Giving

Charity is something you might do all year whether it is giving of your time by volunteering or donating to charities. This time of time, there are a lot of toy, food, and clothing drives collected by your neighborhood centers or churches or other places of worship.

Final Words

The upcoming months are fun and enjoyable times spending with family and friends. Have a plan in place to spend wisely, use a budget and a shopping list during these expensive months. Shop smartly and use debt sparingly. Managing money is sometimes tough during the winter holidays but some things in advance where possible.

Have you started planning out your winter holidays? What works for you when you are shopping for a lot of different things? We would love to hear from you!