smart spending

How to create a budget that works for you

Tighten your belt during the holidays
Tighten your belt during the holidays © Monkey Business Images/Shutterstock.com

Yellen says the best way to budget during the holidays is to pay for holiday gifts with cash.

People paying with cash spend 20 percent less without feeling deprived, according to research by the National Foundation for Credit Counseling.

It's better than using a check or debit card, Yellen says. She says studies show that even the sight of a credit card logo excites consumers. So leave those cards at home under lock and key.

The gifts that people remember the longest are often free, Yellen says. Think about what you might give that is free or low-cost that would bring as much long-term pleasure.

"Can you remember what holiday gifts you received five years ago? If you're like me, you probably can't. But I still treasure the memory of a desert hike that our family took during one holiday years ago instead of exchanging gifts, and it was absolutely free!" Yellen says.

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