Ho, ho, ho, where did my money go? How will you feel in January about the way you spent during the holiday season?
The answer likely will come down to whether you think you spent too much. It's easy to do if you're visiting retail stores, where temptations abound. The sights, sounds and smells of a store, especially around the holidays, can create buying urges.
Although online shopping is on the rise, here are some tips for those who prefer to visit stores in person this holiday season, along with information you need to know about gift cards.
-- Don't shop; just buy.
Plan purchases ahead of time by listing gift recipients, gift ideas and the amount you will spend on each.
Tack on other holiday-related spending, such as gift wrap, decorations and holiday travel. The bottom-line number should be 1.5 percent of your annual income or less, as a rule of thumb. The point is to actually create this list, instead of simply harboring good intentions to make one. This alone will constrain your spending more than any hot sale ever could, if you stick to your list. Two-thirds of consumers did not make a holiday budget last year, and 57 percent don't plan to make one this year, according Consumer Reports' holiday shopping poll.
-- Beware the spending snowball.
Buying has its own momentum. Once you open the wallet or warm up the credit card, it's easy to keep going like the proverbial snowball rolling downhill. Similarly, research shows that once you cheat a little with shopping--straying from your list, for example--it's easier to start binge buying.
One of the results is self-gifting. Shoppers are expected to spend $817 this holiday, with an additional $107 spent on themselves, according to the National Retail Federation. Stay focused by designating trips specifically for holiday shopping and nothing else. Don't touch any item you don't need to buy because handling it will encourage you to buy it, research shows. And once you've finished your list, stop shopping.
-- Time your buying.
Shop after 6 on the evening before an advertised sale is set to begin. Many retailers program the registers the night before, so the sale might come up in the register even if they have not put signs on the selling floor yet, the retail federation said. Otherwise, shop in the morning to avoid crowds and receive the best selection of merchandise.
-- Don't wait.
Don't leave gift-buying to the last minute, which could mean you buy expensive gifts just to finish your shopping. It also may not leave time for comparing prices, and you might be forced to pay for expensive speed delivery if you're mailing gifts.
-- Be careful with gift cards
From a purely financial view, gift cards are an inferior form of currency compared with cash. Gift cards are restrictive, can lose value and require effort to learn their rules, which issuers can change. Cash is simple and accepted everywhere.
Consumers lose nearly $8 billion, essentially donating it to card issuers, because of unredeemed value, expiration or loss of gift cards, according to the research firm Tower Group. Learn more about gift cards in free online special reports at www.consumerreports.org (search for "gift cards").
From an interpersonal view, however, gift cards can make sense. They're more personal than cash and shows the giver exerted some effort for the present.
The fear when giving cash is that it will be absorbed into the household's general operating fund, and the recipients never buys a specific gift for themselves. Gift cards can be good small-value presents for acquaintances, such as schoolteachers or baby-sitters. And gift cards are easy, especially when buying for a picky relative or friend.
If you'll buy gift cards, stick with ones from retailers, which tend to have no fees and expiration dates. And give the sales receipt along with the gift card. Retailers might replace a lost card if the recipient has the receipt.
A financial advantage of gift cards is they are easy to fit into a budget because you don't have to worry about finding a present to fit an allotted amount. And the best gift cards will be ones that are worth more than cash--for example, a movie-theater gift card that comes with a bonus bucket of popcorn. Both cash and gift cards can provide extra value if used during steep post-holiday markdowns in January.
How you feel in January about holiday spending depends on what you do now.
Gregory Karp is a personal finance writer for The Morning Call, a Tribune Co. newspaper in Allentown, Pa. E-mail him at email@example.com.Copyright © 2015, Los Angeles Times