Buying gifts for friends and family, decorating your home, and cooking enough festive fare for everyone to enjoy is a great way to spread cheer — but also potentially rack up some debt.
The winter holidays can put a big dent in your finances, as American consumers are expected to spend an average of $902 on the holidays according to The National Retail Federation. Other estimates have people spending upwards of $1,778, which is an 8% increase from last year.
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To keep generous shopping habits under control and avoid holiday overspending, there are several steps you can take as December starts. Here’s what you can do now to prepare your finances for the holidays.
Track Your Expenses
Start by tracking your income and expenses — either with a spreadsheet or a budgeting app — to see how much money you have coming in and how much you’re spending in a normal week. Then, figure out how much you plan to spend on the holidays for gifts, decorations, entertainment and other expenses.
This will give you an idea of how much you need to set aside now in a savings account and whether you need to trim your regular spending to add cash to that holiday fund. As the holidays approach, spend only the cash you’ve set aside.
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Create a Specific Holiday Budget
You can build your holiday fund over the next couple of weeks by trimming costs. Target big expenses, such as cutting cable TV and reducing how much you spend on groceries.
After housing and transportation, food is the third-biggest expense in American households, according to the U.S. Bureau of Labor Statistics. To trim this major expense so you can stash more in a holiday fund, set a grocery budget, stick to it and only spend the amount you’ve set aside on holiday items.
Get a Seasonal Side Gig To Earn Extra Cash
Instead of holiday shopping, try holiday seasonal work. A part-time side gig you only work for a few weeks can generate some income to cover your holiday expenses and keep you from dipping into extra funds. If getting a second job doesn’t fit your schedule, you can earn passive income from home in your spare time by taking online surveys, transcribing or even playing games.
Gather Gift Ideas Now and Start Shopping Early
Not only should you start checking prices for gifts on your list now, but you should also start buying some items. Picking up a few gifts as soon as possible will help you avoid financial stress and last-minute impulse buying. Don’t wait until December 20 rolls around to figure out which people you want to give gifts to and what you want to buy them.
Set a limit of what you can afford before spending money and create a shopping list based on the people you want to buy gifts for, along with a budget for each person. Creating this list today will help you take advantage of other money-saving strategies and nip holiday debt in the bud.
Comparison Shop Before You Spend
If you have a gift list, start researching prices for items now. Big retailers often inflate prices closer to the holidays as they know they have a captive shopping audience. If you’ve already done your research, it will help ensure you get the best prices for the items on your list.
Set Up Bank Alerts
Shopping with cash during the holidays can be a useful budgeting strategy — especially if you have credit card debt and don’t want to rack up more. However, if you don’t typically carry a balance, using credit cards offers other benefits.
You also should set up an alert to be notified of charges to your card over a certain dollar amount. Bank transaction alerts can not only help you spot fraud, but also help you track if you are about to overspend.
Either way, if someone gets your card or card number and uses it to make unauthorized purchases, you’ll know thanks to transaction alerts. You won’t be liable for unauthorized purchases if you report them quickly.
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This article originally appeared on GOBankingRates.com: 6 Steps To Take Now To Avoid Holiday Overspending
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