Q. Does BBB have advice on Christmas spending? I usually overspend and would like to follow some rules this year while shopping.
A. Unfortunately, with the joy of the holidays comes the stress of overspending. Every year, many consumers start off the New Year in debt. But not to worry! You can make this year debt-free by creating a holiday budget and sticking to it.
The National Retail Federation says most consumers will be a little more generous in their holiday spending this year, with store sales forecast to increase 3.7 percent and online sales increasing 6 to 8 percent. Whether you plan to spend more or less than the average, the key is to set a budget and stick to it. And while it is not the most festive way to spend an evening, it is important to sit down and crunch the numbers. Importantly, creating a budget and sticking to it over the holidays will keep away a painful financial holiday hangover.
The Better Business Bureau recommends the following steps to help with holiday spending this year:
‘ Consider your income. Including your spouse, add up all your monthly income; salary, dividends or interest payments, etc.
‘ Add up regular monthly expenses. This is usually harder than determining your income because there are so many more factors to consider. Start with your rent or mortgage, utilities and credit card payments. Also factor in other expenses for gas and car maintenance, health care and groceries.
‘ Estimate extra holiday expenses. Little purchases have a way of adding up over the holidays and it is important to consider all of the expenses for the season.
‘ Gifts. Make an itemized list of everyone you want to buy for, including family, friends and co-workers, and estimate how much you are willing to spend. Also consider the cost of holiday cards and postage.
‘ Entertaining. Think about whom you will be entertaining and estimate the food and beverage expense. Also consider food or beverage cost you may take to someone else’s party. Include the costs for dining out and going to the movies – both popular expenses over the holidays.
‘ Decorations. Take stock of what you already own and then consider any additional spending you might need to make for a tree, lights, ornaments, wrapping paper, etc.
‘ Travel. Consider the cost of travel if you are heading out of town, including any car maintenance, or pet boarding if applicable.
‘ Charitable Donations. Budget how much you plan on donating to a worthy cause. Learn more about being a savvy donor from the BBB Wise Giving Alliance at www.bbb.org/charity.
Revisit, evaluate and adjust your budget along the way. Compare income and expenses; if expenses exceed income, it is time to go back over your budget and reduce expenses. Consider giving fewer gifts or less expensive ways of entertaining. Suggestion, last year’s decorations are also probably just fine. You may discover you overestimated in some categories and underestimated in others.
Finally, whether you plan to shop at the store or online, it is good practice to have a “game plan” or, even better, a shopping list to avoid impulse buys that can add up. Come January, if you follow your budget you will start the New Year with less stress and the dread of a stack of bills arriving in the mail. Enjoy the holidays.
Jim Winsett is president of the Better Business Bureau in Chattanooga.