As many people are beginning their holiday shopping, spending too much money can become a persistent worry — even with deals and sales galore.
Financial planner Kathryn Bryan says it doesn't have to be hard to spend money wisely if shoppers consider a few key points. These include:
- Budgeting
- Considering payment times
- Looking for gift-swap opportunities
While roughly 30% of Americans overspend during the holidays, there is more than one way to ease financial stress during the holiday season.
"Through the ages we've heard this 'pay yourself first' [sentiment] and that really is an important thing," Bryan said. "When we say 'pay yourself first' it's really making sure we pay into our savings first, and then pay our fixed expenses, and then pay into our debts and then whatever's left over is the fun-money."
Fun-money can refer to anything like personal shopping, eating out or even some subscription services. Still, a key point is to not subscribe to more than you consume. Getting rid of subscriptions that consumers don't take advantage of could be a quick money-saver, particularly over the holiday months.
"Maybe we paid that $2 a month ... maybe $20 a month for [a service] depending on the apps, so all the things that aren't necessary for your life are probably the things that you can just decrease for those few months to save extra dollars," Bryan said.
When it comes to using credit cards, it's also important to stay within a budget that the consumer can reasonably pay back.
"If you find that you're really using your credit cards and you're maxing them out for these gifts, then you are way over the budget that you need to be in," Bryan said. "If you're looking at your budget, you know things to do that you can do are swap gifts with other parents and then maybe have older kids that have something that, even if its second-hand iPad, that will be good for your kid."
Building a strategy of which credit card to pay off and when is also a great way to improve any card user's credit score while staying on track to pay it all back.
"Typically we want to pay the ones with the highest interest rate first," Bryan said. "What typically happens is, if I have extra dollars at the end of the month and I have all these credit cards, I just kind of emotionally pay extra on some of them, but if we take all that extra money and put it towards the highest-interest rate card and then when that one gets paid off — you know, pay the minimums on the other and then pay them off strategically — we typically have a higher rate of success."