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Wallet Wisdom: Holiday budgeting for a happy, stress-free holidays

While many shoppers have the best of intentions during the holidays — it is the season of giving — their generosity may lead them to overspend on gifts for family and friends. It’s no wonder that according to Experian, the holidays cause financial stress for 55 percent of Americans.

Going into the holidays without a plan can have some financial consequences. The same survey found that 31 percent of shoppers have gone into debt due to unexpected purchases, which can pack a high-interest punch.

Budgeting for the holidays can keep you on track financially so you don’t end up with a potential overdraft charge or a credit card bill you can’t handle. Here are some holiday budget tips to keep your season merry and bright:

>> Make your list (check it twice): Write down a list of all the people you’ll be giving gifts to this season and assign price ranges. You may also want to brainstorm some gift ideas and write them down so you’re not tempted to spend more on an impulse purchase. Planning what you want to give ahead of time can allow you to keep an eye out for sales.

Homemade treats are a budget- friendly way to show people on your list you care without overspending. Consider making a batch of cookies or pretty candles that you can customize.

>> Stay on budget: A budget only works if you make the effort to stick to it. You can create a budget using free online budget calculators at

Those who prefer being more hands-on with their budgeting can use the envelope system to track purchases. Take out enough cash to cover your holiday budget and keep it in an envelope in a safe place. You can use several envelopes for different holiday spending categories, such as travel, gifts and entertainment. Only use cash for these purchases, and don’t rely on credit cards to fill in the gaps. As your cash reserve starts to dwindle, you may find yourself being more disciplined with your budgeting.

>> Use cards wisely: Credit cards can offer many valuable benefits such as travel rewards or cash back on purchases. However, if you only make minimum payments on your credit card bills, you’ll pay much more in interest than you’ll earn in rewards. The best way to use credit cards is to pay off your entire bill every month. This means only spending what you can afford, and not charging expensive purchases with the mindset of paying it off later.

When using credit and debit cards, take care to avoid scams and fraud, which can spike during the holiday season. The Federal Trade Commission reports identity theft and credit card fraud has risen in the past year.

Many financial institutions, including Hawaii State FCU, allow you to set up balance or transaction alerts through their mobile apps. You should also review your financial statements and transactions and report any unauthorized purchases to your credit card company immediately.

Celebrating the holidays on a budget doesn’t have to be stressful or difficult. By being more aware of your spending habits, planning your purchases ahead of time, and using credit cards wisely, you’ll set yourself up for greater financial success in the new year.

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