Kent State Expert Offers Budget Advice for the Holiday SeasonPosted Dec. 13, 2011
The holiday shopping season is the easiest time to overspend and lose track of a budget. Special sales, once-yearly deals and the season’s spirit of giving are temptations that lead many Americans to spend more than they budget for the holidays.
According to the National Retail Federation, shoppers spent a record $52 billion over the 2011 Black Friday weekend. The average holiday shopper spent nearly $400 during the Thanksgiving weekend, more than two-thirds of the average American’s planned holiday spending budget.
However, 2011’s increased holiday spending could lead to an even larger debt hangover come January 2012. Last year, 21 percent of consumers planned to carry holiday-related credit card debt after January, according to Experian. Of those, three-quarters expected their holiday spending would continue well into March and beyond.
To avoid overspending and the lingering debt that results, Kent State University Assistant Professor of Finance Dr. Ron Stolle recommends developing a budget plan and sticking to it.
“Planning is essential for long-term financial health,” Stolle said. “You need to develop a shopping list and stick with it. Know what you can afford and don’t go beyond that. It’s easy to go a little crazy and then all of a sudden you say to yourself, ‘Why did I do that?’ Avoid the temptation.”
Stolle also recommends avoiding over-using credit cards for holiday shopping.
“Credit cards just facilitate over-spending,” Stolle said. “More and more, Americans are using cash and debit cards instead of credit, which is excellent for long-term financial health.”
Stolle, who has been teaching at Kent State for 12 years, came to the university after a 29-year career in corporate finance as an officer at three Fortune 500 companies.
He shared his most important budget-conscious tips for the holiday shopping season:
1. Always start with a list and then budget only what you can actually afford – either cash, or credit – but be cautious using credit because it can easily lead to overspending.
2. With your shopping list, avoid impulse, last-minute additions – they destroy the budget.
3. It’s essential to compare prices – use various online (e.g., Shopzilla or Amazon) or smart phone applications, and look for coupons (i.e., Coupon Sherpa) to help save money. Be aware of sales offered by local retailers – often they have great buys for unique items.
4. If you’re buying online, be aware of shipping and handling charges and avoid them whenever possible. You may be able to avoid state sales tax, though you’re obligated in Ohio to report online, untaxed purchases and pay appropriate tax on your annual tax return.
5. Be cognizant of return and exchange requirements and keep all receipts. If you’re shopping for out-of-town folks, stick with national chains to ease the return and exchange process.
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