The holiday season is associated with great deals, but the frenzy of Black Friday and Cyber Monday sales can be an easy way to overspend. With inflation still sitting above the Federal Reserve’s 2% goal, keeping your finances in check while shopping for gifts and deals has never been more important.
Don’t let financial stress ruin your holidays. Instead, follow these practical tips to shop smarter and avoid a financial hangover as the new year begins.
1. Have a Realistic Budget
You would do well to avoid the classic holiday mistake of overspending. A CNET holiday shopping survey says that 41% of U.S. adults will shop during Black Friday and Cyber Monday. But how could you ensure that you are not one of the 16% of shoppers who plan on spending more this year compared to last year? Simply put, it is by following a budget and sticking to it.
Using Excel, Google Sheets, or a budgeting app can help you categorize your shopping. Assign a specific amount of money to each category. Suppose you are attending a holiday gathering; instead of eating expensive catered food, think about preparing a homemade dish. Therefore, you will be able to keep your expenses within limits rather than stretching your finances thin. Prioritize needs and keep track of every single purchase.
2. Shop With Cash or Debit, Not Credit
Credit cards have many benefits, such as protection in purchases. However, credit cards also trap people. Studies by MIT have shown that there is a higher pain level associated with using physical cash rather than swiping a credit card. This means you are less likely to overspend when you are physically handing over cash.
A recent study revealed that 46 percent of the shoppers spend via debit cards, and 41 percent use cash. Cash and debit transactions prompt you to stay within your budget to avoid falling into the trap of “deal now, pay later”. If you must spend via credit card, spend as quickly as possible and settle the balance before interest starts to build up.
3. Set Expectations for Holiday Gifts Early
Gift-giving can be one of the most financially stressful aspects of the holidays. It’s easy to get caught in the trap of comparing your spending to others, especially when social media and advertisements showcase extravagant gifts. To avoid this pressure, set expectations with family and friends about a spending limit.
Secret Santa or White Elephant gift-giving will also keep this event exciting and inexpensive to carry out. Setting boundaries on a price limit should be a major relief in diminishing the costs of the process. You will not end up overspending and can make sure that it becomes more personal while being less commercialized.
4. Manage Your Credit Cards Wisely
Credit cards can be a convenient option, but using them recklessly can result in long-term debt, especially when dealing with high-interest rates averaging 20.42%. Nearly 16% of shoppers plan to carry over their holiday purchases into the new year. This means interest charges can quickly escalate, turning a “bargain” into a financial burden.
If you are going to use a credit card, only do it if you are certain that you will be able to pay off the balance before interest is added. Or, you can use “Buy Now, Pay Later” plans like Affirm, Afterpay, or Klarna. These plans allow you to make interest-free installments but might charge you penalties if you’re late on your payments. Be sure to read the terms so you won’t be surprised by unpleasant surprises.
5. Maximize Savings Using Cash-Back Apps and Browser Extensions
Using cash back apps and browser extensions to save money on Black Friday and Cyber Monday is perhaps one of the easiest things to do. Ibotta, Rakuten, and Honey are great apps that assist you in finding additional discounts and cash back while shopping online.
For instance, Ibotta has partnerships with thousands of retailers like Walmart, Best Buy, and Amazon. The company lets you earn cash back at these stores, both online and in-person, when you link your loyalty account or upload a receipt. Then there are the browser extensions like Honey, which automatically apply the best coupon codes on your cart so you get the best price.
If you are in the market for PC parts or accessories, Cyber Monday usually has some of the best deals on cases and components. Amazon, Newegg, and Best Buy offer great discounts on popular brands like Corsair, NZXT, and Phanteks. Cyber Monday case deals have already started, and with discounts of up to 29% on popular cases like the Corsair 4000D Airflow, now is the time to make that purchase.