Connecticut Money: Start planning now for the holiday spending

This article was published in the New Haven Register on November 6, 2020.

The global pandemic could dampen enthusiasm and spending this holiday season. Paradoxically, that could set up some people to overspend, as a way of compensating.

If you are tired of spending time at home and ready to cut loose for Thanksgiving and Christmas, be careful not to bust your budget. Over-spending may feel good at the time, but it can lead to a New Year’s financial hangover.

On average, shoppers plan to spend 7 percent less this year than last year on holiday expenditures, according to the 2020 Deloitte Annual Holiday Retail Survey. The average American plans to spend $1,387 this year, the survey shows.

Accenture’s 14th annual Holiday Shopping Survey shows 40 percent of shoppers plan to spend less this year than last, and 61 percent plan to minimize in-store shopping due to health risks. In fact, 43 percent plan to do all of their shopping online.

However, a significant number of U.S. consumers actually have extra cash on hand this holiday season, as a result of stimulus checks, higher unemployment benefits and reduced spending since March. If you fall into that category, by all means spend some of it on holiday gift-giving, but keep things within reason. Here are some tips to help you control your finances:

It’s not all about gifts. When you make your spending plan, include non-gift items such as cards, flowers, decorations, food and drink.

Commit to a limit. Look at your overall financial situation and decide how much money you can afford to spend on holiday items. Try to use cash or debit cards and avoid using credit cards, because it’s easier to get carried away with money you don’t have.

Create a budget. Write down the names of people you want to give gifts to and set a spending limit for each person, within your overall budget limit. Then set limits on how much you can spend on non-gift items, as well.

Get started early. Stores advertise bargains late in the holiday season, but shopping at the last minute adds the stress of a time limit, and last-minute shopping encourages impulse buying, an easy way to bust your budget.

Don’t fall for the Black Friday/Cyber Monday hype. Studies show prices are about the same on these “special” days as during the rest of the holiday season, partly because retailers offer sales throughout the season.

Be careful online. The ability to shop online is a blessing during the pandemic, but be aware that low online prices are often accompanied by high shipping costs and service fees.

After all these months of stay-at-home angst, it’s great to get into the Christmas spirit and give nice gifts to family, friends and coworkers. Just be sure you don’t get so carried away that you undermine the financial goals you worked on the rest of the year.