Corralling Holiday Spending a Real Gift to Pocketbook

‘Tis the season to “deck the malls” with your greenery or plastic, your heart full of goodwill and wallet a bit low on cash. But make sure that you don’t meet with shopping folly.

“It is easy to make impulse purchases, thinking only of those you are buying for and how happy the recipient will be,” said Donald Johnson, an investment planning expert at the College for Financial Planning.

“Developing a budget and a gift plan can be critical for those living on a fixed income or experiencing a reduction in their earning power, and it’s a good idea for any gift-giver as well.”

Johnson has these tips to help you stick to your budget, and some gift ideas to make your dollars count:

* Assess your funds and budget. Identify the amount you have readily available for presents now and how much you’ll have for the next few months to pay off any charges without straining your budget. Determine a spending ceiling based on these amounts and stick to it.

* Make a list. Divide your overall gift-giving budget into limits for each person on your list. Then, within that amount, identify which presents can be purchased in order of priority for each individual.

* Research purchases. Watch for advertised specials and compare prices, features and quality. Leave enough shopping time to avoid a limited selection of items, high-pressure sales or impulse buys.

* Investigate return policies. Ask about the store’s return policy before buying. Make sure the merchant accepts returns, permits exchanges or gives refunds for all items, even those on sale.

* Record purchases and keep sales receipts. Make a note, as you shop, on the cost of each item and whether the sale was cash or credit. Keep a running total of your purchases, and check it frequently to ensure that you’re sticking to your budget. This constant tally helps resist the temptation to overspend, especially when using credit cards. Mark sales receipts, noting the item and method of purchase, and retain for potential returns.

* Consider non-traditional gifts. You may want to avoid the mall altogether and give your child or grandchild something that has lasting value, through a custodial account. Depending on your budget, you can choose from the following items, which range from approximately $25 to $1,000 each.

Some shares of stock in Disney, McDonald’s, Toys R Us or a company that owns a sports team has the advantage of teaching youngsters the value of having a stake in a business venture they’re familiar with.

A gift of EE bonds allows a child to “loan” money to the federal government. Common stock mutual funds may impress the power of compounding returns upon young minds.

Collectibles, such as American Eagle gold or silver proof coins, rare coins or stamps serve as tangible gifts that can grow in value.

You might open an IRA account for an older young person who is earning income. If, when the child is 16, you contribute $1,000 to an IRA earning 10% annually, that amount can grow to be worth more than $100,000 by the time he or she reaches age 65.

Finally, for those of any age, a gift to help them better plan their finances or investments is often welcome. A good book or video on financial planning or an inexpensive community college course on money management might meet the needs of friends or family members. Opening a college education account might make him or her more aware of the need to save.

“These tips can help you identify your immediate gifting and financial resources--and limitations--this season,” Johnson said. “After the presents have been wrapped and holiday giving is still on your mind, you may want to begin planning for 1994. It’s best to consider next year’s gifting goals and needs, along with the rest of your financial objectives.”