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Making a List … and Checking It Twice: 4 Spending Rules to Follow Before You Hit the Mall
Barclays Ring Public Blog

Dec Info.jpg'Tis the season for ... blowing your budget. But it doesn't have to be. Here are mind-over-money tips to help keep you on track.


It happens every December: You tell yourself you’re not going to let the holiday shopping season spiral out of control. You’ve got your gift list set and know which sales you’re going to jump on. What can go wrong—right?


But after you’ve fought for a parking space, elbowed your way through the mall crowds and finally hit the aisles of your favorite store, all those carefully laid plans for sticking to your holiday budget start to go out the window. Before you know it, you’re carrying eight more shopping bags than you expected, and now you’re trying to calculate how much damage you’ve done to your wallet. (And for you online shoppers braving the holiday season from the comfort of your couch, you’re not immune; you can still succumb to an overflowing virtual shopping cart.)


If you feel that shopping hangover every once in a while, you’re not alone: According to the 2016 LearnVest/Barclaycard Financial Literacy Research survey, 75% of respondents felt they needed at least some guidance on how to spend smarter.


Fortunately, with a little advance planning and a few mind-over-money tips, it is possible to get your holiday shopping done without busting your budget. To help you along, we asked financial and behavioral pros to offer advice on their best “rules” for staying sane and solvent this season.


Rule No. 1: Stick to ‘Mini-Budgets’ for Each Gift Recipient

Before you start shopping, consider making a list of everyone you’d like to buy something for—including service people, school teachers, coworkers, etc.—and allocate specific amounts to them from your holiday budget, suggests Colin Drake, CFP®, of Drake Wealth Management, based in Sausalito, California.


This will help you have a better idea of how much to spend and on whom ($100 for the in-laws, $50 for your niece, for example), so you don’t overspend on, say, second cousins at the expense of closer relatives. It also helps prevent you from drawing down your pool of gift money to $0—only to remember that you still have three people left to shop for.


And as you’re divvying up your budget, just remember that gifts won’t be the be-all and end-all of your expenses. “Keep in mind that there’s other stuff going on during the holidays—you might be buying more expensive food or traveling—and all of those things need to be factored into spending.”


Rule No. 2: Don’t Let the Holiday Glitz Influence Your Spending

Ever wonder why retailers get so festive so quickly with the holiday accoutrements? It’s to get you in the mood to open your wallets during the “most wonderful time of the year.”


“Holiday overspending happens when we get swept up by our feelings rather than our rational thinking,” says Ben Michaelis, a clinical evolutionary psychologist and author of “Your Next Big Thing: 10 Small Steps to Get Moving and Get Happy.” “Thinking about our positive feelings about the holidays through the help of holiday decorations and music triggers our emotions rather than our more rational ways of thinking about money.” And it doesn’t stop at the carols and décor; those short-term offers and giant sale signs are also designed to create shopping urgency. “When we believe something is a good deal, or we have limited time [to buy something], we are more likely to spend on it,” he adds.


So the next time you enter a store, remember that the signage and mood-enhancing music are basically there to help boost sales; that just might help you resist the shopping siren call. “The reality is, retailers are brilliant at getting you to want to buy stuff for yourself and others,” says Drake. “That combination—[along] with the expectation to give and spend, plus your emotional buttons being pushed constantly—really forces people into spending.”


Rule No. 3: Keep Your Emergency Fund Off-Limits

We know: If only you had $50 more to get your daughter those ice skates she really wanted, or $100 more to get your significant other a new tablet for the morning commute. It won’t hurt anyone to dip into your emergency savings for that, right?


Not so fast. Holiday gifts, unfortunately, don’t qualify as a financial emergency. Those funds should be specifically earmarked for unexpected expenses that have the potential to throw your budget out of whack—things like fixing a broken hot-water heater or covering the cost of a trip to the ER.


So even though it’s tempting, avoid tapping into that rainy day fund, lest you leave yourself and your family financially vulnerable when a rainy day actually strikes. “Your emergency [fund] has a separate purpose, and it’s unlikely you’ll [be able to] quickly replenish it in January anyway,” Drake says. “[So] find more creative ways to show people you care about them.”


Rule No. 4: Take Stock of Where You Can Offset—or Avoid—Costs

Before you whip out your card or cash at the register, think about whether there are ways to get the gifts you want without having to fork over more money. For example, do you have credit card rewards that will give you cash back on purchases or points you can use toward gift cards for loved ones? It might be worth it to redeem them now to help offset your holiday costs.


But one note of caution: Don’t use rewards as an excuse for digging yourself into a debt hole; managing your credit card balances responsibly is more important than nabbing a free gift. “Some well-chosen rewards programs can create some savings,” Drake says. “You already know yourself and whether you’re good at paying your credit cards off or not. If you know you’re good at [it], then go ahead” and take advantage of those rewards.


Of course, there’s always the handmade-gift route. If you feel really constrained by your holiday budget, then you might be better off making something special, rather than dishing out for a pricier counterpart. “People tend to remember the effort and homemade nature of your gift over one that was store-bought,” says Drake.


Along these lines, it’s important to remind yourself that your love for others isn’t measured by the dollar amount you spend on them. Think about it: Do you recall all the gifts you received, and how pricey they were? “Ask yourself, ‘What did I give three years ago, and what did I get?’ ” says Drake. “Chances are, you won’t remember. And that will help take the pressure off needing to spend more.”


Do you have money-saving tips that didn't make our list? Join the Ring Community to share your tips and comment. 


LearnVest Planning Services does not specifically recommend any particular security product or service. This article is presented by Barclaycard in a paid partnership with LearnVest Planning Services.


LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.


Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.


All content provided in this blog is supplied by LearnVest and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information contained in the article or found by following any link within this article.

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