The festive season is one of the most anticipated periods of the year. It is the time of the year when most private and government organisations shut down and their workers rest after a year of hustle and bustle.
Needless to say, the holiday period usually comes around with an appetite for shopping, but those who don’t watch their spending will find themselves to blame when they discover they had accumulated debts or expenses far bigger than their budgets.
During this period, retailers often offer promos or discounts on many products, including fashion and household items such as shoes, clothes, furniture, and electronics.
Because of these discounts, some people usually get carried away and want to buy as many products as possible that they had longed to buy during the year, but in the process of acquiring the items, they may end the year and start the new one with a pile of debts.
While it is not a bad idea to spend money to enjoy the good things of life during this period, it is advisable to shop smart and not end up spending all the money one has saved during the year during the festive season. After all, more expenses will be incurred in the coming days.
Finance experts identify the following holiday shopping habits that can make anyone go broke:
Buying gifts for everyone
When you get into the gift-giving spirit, it’s easy to fall into the trap of wanting to buy something for everyone in your life – from family and friends to colleagues and religious leaders. Ultimately, this is not necessary or expected, says Farnoosh Torabi, an American personal finance expert and author.
“This doesn’t mean you have to turn into a scrooge, though. Just think about other ways to show you care. Handwritten cards and home-baked goods are great substitutes for store-bought gifts,” Torabi writes in money.usnews.com.
Shopping without a plan
Janet Alvarez, a personal finance expert based in the United States, says failing to set a holiday budget is the most common financial misstep during this time of the year. It’s easy to overspend if you are not clear about your limits, she says.
She says, “To come up with a holiday budget, look at what you spent on gifts and travel last year and compare it to your monthly expenses to figure out what you can realistically afford.
“Just make sure to add wiggle room for unexpected expenses and one or two unanticipated gifts. And keep in mind, you may need to tweak your gift spending plan so you don’t go into debt.”
Overindulging in presents for yourself
If you buy a gift for yourself every time you pick one up for a loved one, you are likely going to spend beyond your budget and be in debt.
Torabi says, “Always give yourself 24 hours to consider any unplanned purchase or add the item to your wish list to help family and friends with their holiday shopping.
“When it comes to indulging in other seasonal temptations such as spa treatments, consider postponing such additional expenses until after the New Year to better manage your cash flow.”
Believing expensive gifts are best
Some people see extravagant gifts as more significant, and many are willing to go into debt to afford them. However, experts say the best presents are personalised and thoughtful.
“Recognise that holiday gifts need not be the most ostentatious displays of affection, and can be simple or heartfelt,” Alvarez says.
“Consider giving experience gifts such as tickets to a sporting event or make plans to take the kids so their parents can enjoy a date night. Ultimately, it’s the thought, not the price tag, that makes a present memorable,” she adds.
Failing to compare prices
Don’t assume the sale price is the best price you can get. Spending a little time comparing prices and searching for coupons can result in major savings.
“A quick search online can help you save an extra 15 to 20 per cent off or more on a gift,” says finance expert John Schmoll.
Whether shopping online or in-store, Schmoll suggests running a quick search to compare prices across popular stores, noting that there are free shopping apps that provide instant price comparison on your mobile device.
“Use these tools to see if the retailer will match a competitor’s price and save you the time of driving to another store,” he says.
Having a fear of missing the best deals
Holiday shoppers often spend more than they planned due to the fear of missing a great deal, says Kumiko Love, a financial educator at TheBudgetMom.com.
The lure of a sale is hard to avoid, but Love suggests asking yourself if you would buy the item at a regular price. If not, you don’t need it.
“Prevent temptations from getting the best of your budget by turning off push notifications in retail apps that send sale alerts, and unsubscribe from store newsletters.
“Instead, search for the sales when you’re shopping and stick to your list. If it’s not on your list and not in your budget, it’s not something you need at that moment, even if it’s on sale,” she says.
Additionally, if you find yourself spending more to get a bigger discount – whether you are tempted by buy two, get one free promotion, or spending N100,000 to get N10,000 off deals – chances are you’re buying items you really don’t need.
No matter how little you pay for an item, it’s a waste of money if you don’t need it. Don’t let big discount claims influence your purchase decision. It’s ultimately smarter to spend less even if you don’t get as many savings. If you want to take advantage of buying in bulk, get a friend or family member to split the purchase instead.
Opening multiple store cards for extra discounts
Retail associates will push store cards that offer an additional discount of 10 to 20 per cent off your purchase on top of already enticing sales. Though extra deals may be tempting, make sure you consider the terms carefully. These cards carry high-interest rates with low credit limits and expensive fees. Plus, you’re likely to spend more in a single transaction to benefit from the savings.
It’s better to stick with a single credit card that offers cashback or frequent flyer miles to maximise rewards. Otherwise, shop with cash.
“This will help you think through your purchases a bit more, while also avoiding debt come January,” Schmoll says.
Six ways to shop wisely during the festive period
In addition to the above tips, the following is a list of tips on spending wisely and finding the best deals – both online and offline – during the festive season, as stated by Mark Ellwood on businessinsider.com:
Abandon your online shopping cart
Ellwood suggests buying items in a “two-stage process.” First, go onto a site, find what you like, and put it in your cart. Then, close the browser window and wait a day or two.
Leaving items in your virtual cart shows stores you’re contemplating a purchase and this encourages stores to entice you with a deal.
“Expect a coupon or promo of some kind to appear in your inbox to tip the purchase,” Ellwood says.
Get social
Often, online sales happen unannounced. So, Ellwood advises creating a separate Twitter handle specifically for following “savvy bloggers and deal hounds.” The author says their tweets could turn you on to a sale you otherwise wouldn’t have known about.
“Watch and see when they tweet about certain brands. Of course, you could also just use your regular Twitter account, as long as you don’t mind a feed full of shopping deals,” he says.
Be aware of your location
According to Ellwood, you could be at a disadvantage if you live in an upscale area and do your shopping from home.
“Businesses online use whatever information they can glean from you to charge an appropriate price – including your location. If you’re in an affluent area, beware. You might be charged extra because the vendor knows you can afford it,” he says.
He advises using a VPN (Virtual Private Network) to spoof your IP (Internet Protocol) address and avoid this issue. An alternative way could simply be checking prices when you’re away from home to see if there’s any advantage, whether that’s after hours at work, during some downtime on vacation, or while taking a breather during a family visit.
Consider buying refurbished items
Whether you’re shopping for a new kitchen appliance, power tool, or personal gadget such as a laptop, consider refurbished options to save money without sacrificing quality.
Some retailers sell refurbished items like laptops, smartphones, and tablets, and the prices are notably lower than if you purchase the devices new.
Just make sure that any refurbished products you’re looking at come with a strong warranty if you have an issue.
Talk to a store associate
If your bargain hunt is turning up nothing, turn to a store associate or online customer service representative who may be able to help you find additional savings.
Experts say it never hurts to ask a sales associate if there is an available discount as they (sales associate) may be privy to a discount or promotion that you can take advantage of.
Remember the reason for the season
Lastly, whether you celebrate Christmas or other festivities or not, keeping the holiday’s spiritual message at the centre of everything is very important.
“Instead of spending weekends leading up to Christmas in the mall, it would be a lot better gift to spend your time with your family,” American finance expert and author, Clark Howard, writes on bankrate.com.
Similarly, Lagos-based finance expert, Kola Oni, says remembering the reason for the season is the most important thing to have a successful celebration.
“People should not borrow money to have fun or impress anyone during this period. At the end of it all, it is not about the many gifts, foods, or drinks that make the festive period blissful. Spending time with one’s spouse and kids or other family members alone can be the most important thing to do,”.
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