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The nation’s financial crisis is casting a shadow on Christmas. Unemployment rates are high, and budgets are tight. The financial uncertainty has many people cutting back this holiday season.
LSU AgCenter family economist Jeanette Tucker recommends approaching spending this season the way one should every year – with a plan and a budget, even if that budget is smaller this year.
“Make sure your budget includes not only gifts but other holiday-related expenses such as food, travel, gift wrap, Christmas cards and stamps,” she said.
Tucker encourages consumers to come up with a list of items you intend to purchase during the holidays and assign a spending cap to each.
If you are really looking to save money this holiday season, the economist says to divide shopping trips. The first trip to stores and online vendors should be to compare prices and quality.
“Leave the cash and credit cards at home,” Tucker said.
The second trip is for purchasing. When you head out to the stores, bring an envelope with each item and spending limits written on it. Subtract as you spend, and put the receipts in the envelope.
“This will keep you within your budget and organized if returns are necessary.”
Tucker also warns against using credit cards for Christmas purchases.
“Research shows credit cards give people a sense of empowerment over their spending, and they spend more than they planned to,” Tucker said, adding, “In many cases the toys are broken, the cologne bottle is empty, but we’re still paying for them on our credit cards.”
If you must use credit, try to stick to one card, preferably the one with the lowest interest rate, for all of your purchases.
Be creative to save
Get creative this holiday season and save. Start with the way you approach giving.
If you typically give to all of your family and friends, suggest picking names with groups to cut down on the amount of gifts you have to give.
Remember that a Christmas present doesn’t have to come from a mall. Give the gift of time. Offer to clean the house of a busy friend or older relative. Give a coupon of free babysitting to a couple with young children. Give a gift from the kitchen or try making a handmade gift. This will make the gift more personal.
Gift card caveat
Gift cards are always a popular present during the holidays, but Tucker warns that people tend to spend more on a gift card than they would on an actual item. The average gift card is worth $53.
“The amount you spent is right there on the card, and you don’t want to seem cheap, so you usually add a little more.”
Tucker also says to be aware of the terms and conditions of the card you are purchasing. Ask about expiration dates, any fees associated with the card and whether it can be used at the retailer’s online store.
A number of stores are going out of business. Be sure to purchase a card from a financially stable company and ask what happens to the card in the event the store goes out of business or files for bankruptcy.
Treats during recession time
With the current economic situation, consumers are cutting back on small luxury items like entertainment, gourmet coffee or spa treatments. Tucker has some gift ideas to help friends and relatives through this financial downturn.
Instead of giving old standards such as a tie or a sweater, give movie tickets, a gift basket with different flavored coffees or gift certificate for a manicure.
“This allows the receiver to still take part in activities they enjoy even if they are cutting back.”
Other ideas include a piggy bank with coins for children, a session with a financial planner or stocks, which Tucker points out, are on sale right now.
Listen to “Tips keep holiday spending from getting out of hand.”
The LSU AgCenter is one of 11 institutions of higher education in the Louisiana State University System. Headquartered in Baton Rouge, it provides educational services in every parish and conducts research that contributes to the economic development of the state. The LSU AgCenter does not grant degrees nor benefit from tuition increases. The LSU AgCenter plays an integral role in supporting agricultural industries, enhancing the environment, and improving the quality of life through its 4-H youth, family and community programs.