11 ways to save money during the holidays

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Online shopping this holiday season is expected to grow 25 to 35 percent over last year as pandemic lockdowns keep people in their homes, according to Deloitte’s annual holiday retail forecast.  Overall, the global consultancy firm expects holiday sales to inch up 1 to 1.5 percent year over year.

“E-commerce is likely to be a big winner because consumers have shown a clear movement towards buying online rather than at brick and mortar stores,” Daniel Bachman, Deloitte’s U.S. economic forecaster, said in a press release.

Bargains should abound as retailers struggle to survive.

“They are offering deep discounts earlier than ever to ensure consumers can find the holiday deals on the products they want at the price they want to pay,” says Danielle Inman, senior director of media relations for the National Retail Federation.

But there is more to saving money during the holidays than price cuts. It takes some planning and creativity. Here are 11 ways to save money during the holidays.

1. Set up a holiday budget

If you want to keep a tight rein on your spending this holiday season, the first step is to create a budget and make up your mind you are going to stick to it.

Some savvy consumers start saving early for the holiday season by taking advantage of old-fashioned Christmas Club accounts at their bank or credit union or by opening a short-term certificate of deposit.

Plot out how much you can spend on gifts, decorations, food, travel and all other holiday-related expenses. And don’t forget little things, like Christmas cards and stamps.

Add a little extra for unplanned purchases you can’t pass up. “Be sure to build in some ‘mad money’ so you don’t end up getting into debt by going overboard on impulse items,” says Lisa Lee Freeman, a consumer expert.

2. Make a shopping list (and stick to it)

After you’ve set your holiday budget, make a list of all the people you want to buy gifts for: Focus on how much you can spend on each one, not on what you want to buy.

If the list is too long for your budget, go through it again and pare names or spending amounts.

“Lighten your holiday load,” urges Freeman. “Cut your budget by cutting down your list. Agree not to exchange gifts with friends who you know will probably understand and agree to skip this year due to job loss or other financial hardships. It’s a tough year for a lot of us.”

3. Add your name to the gift list

This might sound selfish, but it’s psychologically effective: Add your name to the gift list.

Sometimes, you buy something for someone that you like so much, you wish you had kept it. The best antidote for that is to allow a little extravagance for yourself.

“Sometimes, you just have to splurge on yourself,” says Freeman, “especially when you find a good sale — and you should have a budget for that, too.”

4. Go with Secret Santa, potlucks and e-cards

If you have a large family, buying gifts and cooking for everyone can force you to spend more than you can afford and take the joy out of giving.

A fun, easy way to get around that is to plan what is commonly called a “Secret Santa” gift exchange. Everyone draws a name without telling who it is and buys just for that person. Usually, there is a moderate spending limit imposed, and the element of surprise at gift-exchange time adds to the fun.

Or, get with relatives and make a list that covers the entire family but doesn’t leave anyone feeling like they have to shop for every niece and nephew.

For holiday meals, plan potlucks. By having everyone contribute, you will save a lot of money and gobs of time and energy.

E-cards are another way to save money and time. Rather than buying holiday cards and paying 55 cents for postage for each one, find some nice e-cards online. They’re a free or fairly inexpensive way to send a holiday “hello” to far-flung family and friends. If you have an artistic flair, you can create your own holiday cards.

5. Pay cash

One way to avoid holiday debt is to pay cash for everything. Once your holiday budget is finalized, take that amount of money out of the bank and stick to your spending plan.

Once that money is gone, you’re done shopping. “Paying with cash is always smart when you are on a tight budget,” Freeman says.

Of course, you can’t use cash for shopping online. In that case, Freeman recommends using a prepaid card. Prepaid cards can be bought at Walmart, convenience stores and many other retail outlets.

Prepaid cards limit your spending to the amount that is loaded onto the card. If the card is loaded with $500, that’s all you can spend. Prepaid cards are a great tool for tracking and limiting your spending.

Be careful of reload fees and other charges. “Just be sure to find a card that doesn’t come with lots of fees,” Freeman advises.

6. Be cautious with credit cards

Credit cards are handy financial tools, but they can be dangerous at Christmastime. Some credit card customers end up with a holiday debt hangover that lasts a long time.

“Shoppers can lose their sense of financial responsibility when it comes to using their credit cards,” says John Ulzheimer, a consumer credit expert, author and educator. “Certainly there is nothing wrong with using credit cards for your holiday shopping, just as long as you spend within your means and can pay off any balances with relative ease.”

Always use the card that offers the lowest interest rate. It’s also a good idea to track your credit card spending.

“The safe bet when it comes to holidays and plastic is to use your credit cards for the things you would have paid cash for and then pay off the balances as soon as possible when your statement shows up,” Ulzheimer advises.

7. Avoid last-minute shopping

Many of us are guilty of running out for gifts at the last minute and paying too much. Consumer expert Freeman calls this “panic spending” and urges shoppers to avoid waiting until the final days to buy gifts and supplies.

The National Retail Federation is also recommending that shoppers get an early start this season.

“In a year that has been full of uncertainty, NRF is encouraging consumers to take the stress out of the holidays by starting their holiday shopping early to ensure the gifts they want to buy are in stock and can be delivered on time,” said Inman.

8. Give the gift of your time

If you want to give someone a gift but can’t afford to buy anything, consider giving the gift of your time. You could baby-sit or walk the dog for a friend with an overloaded schedule.

An elderly relative might appreciate someone to run errands, do some housework or to take them to an appointment or out for lunch.

Handmade gifts are nice, too. If you’re already baking cookies for your family, making an extra batch for someone on your list is pretty cheap.

9. Thoughtful gifts outshine expensive ones

Some people are hard to buy for. They’ve reached a point where they have everything they need. This gives you an opportunity to be creative and come up with a thoughtful, simple gift that is also inexpensive.

It could be a framed photo of a special memory, an engraved letter opener, tickets for an event or show, a decorative pillow or something beautiful from a local antique mart or flea market.

10. Take advantage of special sale days

There are a few days during the holiday shopping season when deals abound:

  • Amazon Prime Day kicks off on Oct. 13.
  • Black Friday, the day after Thanksgiving, is the traditional kickoff to the holiday shopping season.
  • Cyber Monday is the Monday after Thanksgiving.
  • Free Shipping Day, on Dec. 14, is the day hundreds of stores offer free shipping with no minimum order, plus other special deals.

“Shop the special holiday sales,” urges Freeman, who notes that it’s also a great time to snag bargains for weddings, birthdays and other special events throughout the year.

“The prices of electronics, small appliances and many other items are slashed during Black Friday sales, so it pays to take advantage of the deals and stash them away for gifts you know you’re going to need to buy later on. Another great way to save on gifts is to shop the post-holiday sales,” she says.

11. Use apps that can save you money

Take advantage of technology this holiday shopping season and use one of the many budgeting and money-saving apps. “Keep tabs on your spending by using a budgeting app like Mint,” Freeman says.

She also encourages shoppers to use apps like RetailMeNot, Honey and Rakuten to get cash-back deals and discounts automatically when they shop online. “You can also download the RetailMeNot and Rakuten app for cash-back deals in stores,” she says.

Freeman also warns against what she calls “fake sales” when shopping in stores. “It’s easy to get sucked into a bad deal when you shop in stores during the holidays,” Freeman says. “Those ‘doorbusters’ are designed to whip you up into a bargain frenzy.

“Don’t assume anything is a great deal, even if the sign says 50 percent or 60 percent off,” she says. “Always check your phone to make sure you’re really getting a bargain. I do a Google search and also check prices on Amazon, Walmart and eBay.”

Bottom line

It’s easy to get caught up in the holiday spirit and overspend. But the thrill of giving nice gifts and hosting big parties and fancy Christmas dinners is fleeting compared with the stress that comes later, when you have to pay for it all.

By planning ahead, saving money and sticking to a budget, you can avoid debt and keep your spirits up long after the holiday lights go out.

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