Contact The Editor
The holidays can put a big dent in anyone's bank account. In fact, consumers are expected to spend about $804 on average, this year on gifts, decorations, greeting cards, food, candy and more, according to the National Retail Federation. That's not small change.
Even if you were smart enough to set aside extra money to spread some holiday joy, you can easily bust your budget if you use the holidays as an excuse to abandon good financial habits. Here are 11 holiday money wasters to avoid:
Not Setting a Budget
To avoid overspending and racking up debt, it's imperative to create a realistic budget to which you can actually adhere.Take the time to make a gift list with a dollar amount you can afford to spend on each item. Because most people tend to buy things for themselves while doing their holiday shopping, you should factor a gift for yourself into your budget, says Trae Bodge, senior editor at coupon and deal site RetailMeNot.com. And don't forget to write down all the extra things you'll be paying for -- such as the restaurant meals you'll eat while out shopping, ingredients for holiday goodies that you'll make for friends and family, postage for holiday cards, cab rides home from holiday parties, and the list goes on.
One way to stick to a holiday budget is to put cash in envelopes designated for certain expenses. You'll know you've reached your spending limit when the cash from the envelope is gone.
Shopping at the Wrong Times
Black Friday is synonymous with deals, but not everything goes on sale the day after Thanksgiving. For starters, some of the best deals this year will be during sales before and on Thanksgiving, according to DealNews.com. And won't find deep discounts on several items until after the holidays -- such as brand-name big-screen TVs, which usually are marked down to their lowest prices in January before the Super Bowl.
Not Comparing Prices
There are plenty of sales around the holidays, but not every deal is actually a bargain. Make sure you compare prices before you make any purchases to find the best deal and avoid spending more than you have to on gifts. Sites such as PriceGrabber.com and the browser add-on PriceBlink make it easy to find the lowest prices for the items on your gift list. FatWallet's Black Friday app can help you compare current deals on your holiday gift list items with anticipated Black Friday sale prices.
Racking Up a Credit-Card Balance
You might think you're saving money by buying all your gifts and holiday items on sale. But if you charge everything to a credit card and don't pay off the balance, those savings can easily be erased by the interest you'll pay. The Credit.com Credit Card Payoff Calculator can help you figure out what the real cost of carrying a credit-card balance is.
Using Layaway
Layaway allows customers to select items they want and pay for them over a period of time. Once final payments are made, items may be picked up. This method of payment can be a good option for consumers who would otherwise use a credit card and not pay off the balance quickly (thus accruing interest).
However, there are several reasons layaway can be a money waster, such as the fees you'll have to pay. Retailers charge a cancellation fee, ranging from $5 to $15, if you decide not to go through with your layaway purchase. Add this to the nonrefundable $5 service or initiation fee some charge, and you've lost up to $20. Plus, many retailers don't allow price adjustments if items go on sale after you put them on layaway -- so you miss out on a lower price.
Paying Too Much for Shipping
If you plan to do your shopping online, you often can avoid paying for shipping by having your purchases shipped to a retailer's brick-and-mortar store or by taking advantage of free shipping promotions. You can find free shipping codes at FreeShipping.org, or you can take advantage of Free Shipping Day on December 18, when hundreds of merchants will offer free shipping on all purchases with guaranteed delivery by Christmas Eve.
You also don't want to pay too much for shipping boxes of hand-assembled gifts to friends and family. Get your gifts together early, and you'll pay the U.S. Postal Service's flat rate of $12.65 to ship a medium-sized box by priority mail -- compared to $44.95 flat rate for next-day express box delivery for people who wait until the very last minute.
Not Keeping an Eye On Your Airfare After You Buy
You can get most airlines and online travel agencies to give you a rebate -- usually in travel credits or vouchers -- if your flight's price drops below what you paid, but you have to ask for it. Yapta.com will send you alerts if the price drops on a flight you've booked. Be aware, though, that some airlines can charge hefty fees for re-booking your flight. If the fee outweighs your rebate, it's not worth it to make a change.
If you plan to stay in a hotel over the holidays, you can book your room using Tingo, which will automatically re-book your room at a lower rate if the hotel drops its price. Then you'll get a refund for the difference.
Exceeding Your Charitable Giving Budget
If you stuff a few dollars into the Salvation Army pot every time you go to a store or say yes to every colleague who is collecting money at the office for a special cause, your generosity could easily break your budget. Make a plan for your seasonal giving: Identify specific organizations that you care about, and allocate appropriate funds for them. Leave room in your budget for some discretionary donations, and be prepared to confidently and politely decline some requests once you've reached your limit. See Make the Most of Your Charitable Giving for more advice on how your donations can have the most impact.
Be especially wary of e-mail and telephone solicitations because they could be scams.
Going Overboard with Holiday Decorations
The average American will spend about $54 on holiday decorations this year, according to the National Retail Federation. And your electric bill can jump as much as $80 a month if you light up the neighborhood with an elaborate outdoor display, according to Duke Energy.
You can easily make your home look festive without spending big bucks on a light display and racking up a huge electric bill. Try the natural approach, instead -- fresh greenery collected for free from your yard or a friend's yard.
Buying Bad Gifts
Don't waste your money on gifts that no one wants, such as useless gadgets, tacky Christmas apparel or the infamous fruit cake. Instead, buy a gift card if you don't know exactly what to give someone on your list. Opt for all-purpose cards, such as an American Express or Visa gift card, rather than store-specific -- unless you know the person's favorite store. In that case, don't pay full price for a gift card. Visit sites such as Cardpool and Gift Card Granny for discounted cards.
Granting Your Kids' Every Wish
You might not view buying every item on your children's wish list as a waste of money -- especially if you cherish seeing their eyes light up every time they open a gift. But keep in mind that many of those items might end up under a bed or in the back of a closet within just a few days. Your money will be better spent on a few items (or even just one item) you know they'll really use.
Comment by clicking here.
Cameron Huddleston is an online editor at Kiplinger's Personal Finance magazine. .
