How to Avoid a Holiday Hangover

With consumer sentiment the highest it’s been since the recession, shoppers are expected to open their wallets a bit wider this year. Will holiday spending leave shoppers in the red? Not if they plan wisely and use some common sense tips. Simple planning can make the season more care-free and enjoyable when you know you’re in control of your budget.

To help consumers spend within their means and enjoy a financially happy New Year, follow these tips:

Develop a budget. Before you start shopping, develop a realistic budget. Consider your income, subtract your normal monthly expenses, and then add any savings to whatever cash is left over. If you need to use your credit card, think about what you can afford to pay back in January. Don’t forget costs beyond gifts, like postage, gift wrap, decorations, greeting cards, food, travel and charitable contributions.

Make a list and check it twice. Keep your gift list limited to family and close friends, noting how much you want to spend on each.

Spend carefully. Avoid shopping while rushed or under pressure, which can lead to overspending. Make sure to comparison shop online first, or download an “app” that lets you compare prices before you buy anything in a store. Before you head to the cashier (or online “checkout”), make sure your purchase is within the budget you set.

Avoid traps. Finding a spectacular sale on something you’ve been wanting can easily throw you off course. Stay strong and stick to your budget. And don’t apply for store credit cards you don’t need just to get a one-time discount.

Use credit wisely. Limit the use of credit for holiday spending. If you must use credit, use only one card, preferably the one with the lowest interest rate, and leave the rest at home. Pick a date when you can pay off your holiday credit card bills, and commit to paying off the
balance by that time. Be sure to check statements for unauthorized charges and report them immediately.

Save your receipts. Not only will you need them for possible returns, you’ll need them to keep track of what you’ve spent and to compare with your credit card statement. Knowing how much you spent will help you plan for next year, too.

Be creative. Consider simple, hand-made gifts instead of store-bought ones. Send greeting cards or handwritten notes of appreciation for those outside of your list. Home-baked goods, simple crafts or hand-made gift certificates for your time or talents are often less expensive and more appreciated that what you would buy at a mall or big-box store.

These tips are provided by Iowa State Bank in partnership with the American Bankers Association. If you have specific questions, contact your local banker at Iowa State Bank. Iowa State Bank is an Equal Opportunity Lender. Member FDIC.

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