Overspending and breaking budgets during the holidays is all too common. Last year, Americans expected to spend an average of $1,014 on Christmas or other holiday gifts, which was more than the $923 reported in 2023, according to a Gallup poll.
This year, you’re making a list and checking it twice-for overspending. We asked ChatGPT how you can avoid overspending during holidays — here’s what it said.
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Start With a Realistic Spending Plan (Not Just a ‘Budget’)
ChatGPT suggested thinking of your plan like a “holiday roadmap,” deciding on your total cap and then dividing it into categories, such as gifts, food/entertaining and travel. This helps you avoid “chasing deals” later.
Humans are “wired” to be consumers and overspend, Brad Klontz, psychologist, certified financial planner (CFP) and behavioral finance expert, said to CNBC.
He said people often overspend because long-term goals feel less tangible and resisting immediate rewards demands additional mental effort and self-control.
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Use the ‘Gift-Per-Person’ Rule
Stick with a price limit for each person before you shop so that you can avoid add-ons that retailers are designed to trigger, ChatGPT said.
Even if you stumble upon the perfect gift, you might not want to give your distant cousin the same price limit as, say, your best friend. Better yet, ask yourself who really needs a gift?
Avoid Emotional Triggers Retailers Use
ChatGPT pointed out the psychological triggers that fuel overspending, including flash sales that play on scarcity mindset, holiday music and decor that hooks nostalgia with impulse and “buy more/save more” which brings the illusion of value.
So, the next time you’re shopping, notice the items at the checkout aisle — from candies to travel-sized toiletries — and know you’re winning by resisting that extra grab.
Switch To Cash or Prepaid Method of Gifts
A balance indicates when you’re done shopping with clear limits, ChatGPT said. Consider allocating a set, whole dollar amounts like $25 or $50 so you don’t go a dollar or cent over budget. When purchasing gift cards, keep in mind the usability and interests of the receiver to further avoid the potential of feeling like you’re wasting any money.
Track Your Purchases Weekly, Not Monthly
Don’t be in for a shock come January. A quick review of your spending each week helps you course-correct early, according to ChatGPT. You can stay on track with your spending and stress less if you know how far along you are in your budget.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT: How Can I Avoid Overspending During the Holidays?
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