'Tis the Season: 5 Tips on How to Save on Holiday Expenses

Tuesday, 19 Nov 2013 09:52 AM

By Kristin Caliendo

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The holiday season is underway and stores across the country are hustling to decorate storefront windows to entice shoppers into their stores.

With all the buildup and temptations, Americans are easily lured into overspending and overextending their finances this time of year.

The key to surviving the holiday season is to create a spending plan and stick to it, Brittney Castro, founder and CEO of Financially Wise Women, writes in an article for CNBC.

Editor’s Note:
Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)

Castro lists five ways to watch your spending while still enjoying the magic of the holiday season:

Host a potluck. Going out to dinner is expensive, and during the holidays, gathering with friends and loved ones at a restaurant can really take a toll on your wallet. By the time you factor in your meal, beverages, tax and gratuity, you don't get a lot of bang for your buck as opposed to what you could buy at the grocery store and make at home.

Rallying the family together and hosting a potluck is far more intimate than managing the masses at a restaurant is and will save everyone some money. Divvy up dishes and enjoy the fun of describing ingredients and sharing recipes. After all, the holidays are about sharing and catching up, which can certainly be problematic in a noisy restaurant.

Gift-giving games. Facilitating a different style of gift giving can cut your expenses and alleviate the stress of finding the right gift for everyone on your list. Castro suggests opting for a Secret Santa gift exchange with a set cap so that everyone can join in and has just one gift to purchase.

Take a Staycation instead of a vacation. Popular travel destinations know that those who work splurge on getaways during the holidays and so they hike up prices. Save money on airfare and hotel accommodations and stay close to home during the holidays. Venture off to places nearby that you never seen or plan some fun day trips to places you've always wanted to check out, such as the local art museum.

Pay for airfare with points. Plan your holiday travel based on when your frequent-traveler points or credit card points can be used, Castro suggests. Oftentimes, people don't use their points because the days they want to travel fall on black out dates and so they just choose to pay outright for premium travel dates. Check your availability and if you can be flexible on travel dates, you might be able to use those points after all.

Plan ahead for next year. Take a moment to look over receipts and spending from previous years and this year and develop a savings strategy. For instance, if you determined that you overspent this year, decide on a comfortable budget for next year. Divide that number by 12 and each month put aside the set amount of money into a savings account set up especially for holiday expenses.

Bankrate estimates on average each shopper is expected to spend $832.36 on holiday merchandise each year, which can be tragic to your checkbook. The best way to fight off temptation and overspending is to have a clear and defined budget and stick to it.

"If you don't budget and set a specific dollar limit, then your spending grows and grows and grows. In January you'll be horrified by how much you've spent," Mari Adam, a certified financial planner in Boca Raton, Fla., tells Bankrate. "And, don't get locked into the thought that how much you spend measures how good of a person you are.

"Downsize holiday spending, not your holiday joy. Limit the size of your Christmas in terms of gifts, and make it big on meaning — from family, friends, traditions to creating memories."

Editor’s Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)

Related Stories:

Big Discounters Feeling Less Holiday Cheer

Macy's: 'Every Single Day Is Going to Matter' in Shortened Holiday Shopping Season

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