Question: Consumers spend more money during the holiday season than at any other time of the year. Why is it important to have a budget for the holiday season?

Answer: Creating a detailed budget which accounts for the planned and unplanned purchases of the holiday season can help consumers anticipate and more responsibly respond to financial stresses. Through budgeting, consumers are able to better anticipate the added costs of the holiday season (gifts, travel, holiday party expenses, meals and entertainment). This is important because it allows consumers to make more informed decisions, in advance, about how these costs will be managed.

The benefits of detailed budgeting are not limited to consumer finances. Detailed holiday season budgeting also serves as a reminder to consumers of those family members and friends to whom gratefulness should be expressed.

Q: How can consumers stay on track with their holiday budgets?

A: Consumers can best stay on track with their holiday budgets if they set their budget earlier rather than later. Although waiting to set a holiday budget until the holiday is nearer increases confidence in the ability to accurately predict expenses, this confidence leads consumers to underestimate how much they will spend. As a result, consumers who wait to budget spend more than they thought they would. So start planning now. When creating your budget, be detailed and stick to it.

Q: What is the easiest way to reduce your spending during the holidays?

A: The easiest way to reduce spending is to commit to showing others you care through actions that don’t involve money changing hands. Also, reduce your spending by lowering expectations of what you would like to receive during the holiday season and communicating this to others. Others will expect less from you and be more forgiving. Consider asking others to perform a random act of kindness for a stranger in lieu of spending on you.

Q: While shopping, how can consumers avoid unnecessary unplanned purchases?

A: To minimize your susceptibility to unnecessary unplanned consumer purchases, be aware of the tactics retailers use to influence unnecessary unplanned consumer purchases. These tactics are based on drawing consumer attention to items prone to being purchased spontaneously.

Tactics often include the use of one or more of the following: bright lights, loud noises, flashy product displays, in-store announcements, placing such items near cash registers and stocking such items at the target consumer profile’s eye level. Items are often priced low so to minimize consumer guilt. As a result, unnecessary unplanned purchases can inflict substantial damage to the unsuspecting consumer’s pocketbook over time.

Q: Should consumers start shopping in advance for gifts or wait until the official holiday shopping season begins?

A: There are benefits and trade-offs to each. Shopping in advance may offer greater convenience and lower prices. However, delaying spending allows consumers to plan better. Generally, consumers are better off waiting unless there are strong reasons for purchasing in advance. People, relationships and trends change. Waiting allows consumers to better account for this change.

Before purchasing an item, consumers should ask themselves at least two questions. First, what am I receiving by buying now rather than in season? Unless purchasing now results in substantial added savings or other benefits, there is no reason to purchase now rather than later. Second, who is this gift for? Consumers should be more willing to hold off on purchases for people likely to undergo meaningful change in the near future or for whom your relationship with them may change quickly. So consider waiting on buying gifts for children, teenagers, recent divorcees and dating partners.