- It can be difficult to stick to a budget and savings goals during the holiday season.
- Financial planners say spending too much on Black Friday and not budgeting for gifts hurts many customers.
- Not meeting financial deadlines, storing credit cards and buying now, paying later for financing are also mistakes.
- Read more from Personal Finance Insider.
Every year when the holiday season arrives, I become more careless in spending money. For the first time, I spent most of 2021 on a tight budget that I respected and closely followed. He wanted to increase the amount he was saving this year, and to do so, he needed to be cautious and monitor how much he was spending on a daily basis.
But as party invitations start arriving in my mailbox and big shopping deals looming, I’m worried I’ll slip back into bad habits and overspend in November and December.
To help make sure I stay on top of my savings, I asked financial planners to share the biggest financial mistakes their clients make during the holiday season.
1. They overspend on Black Friday and during other big sales
I have always been a discount shopper and rarely buy anything when it is full price. That’s why I’m tempted to overspend on
when I see all the great sales. Financial planner Tania Brown said holiday shopping deals should factor into her financial plan.
“Black Friday and all the great deals are awesome, but if you can’t afford to buy the item or have to put it on your credit card to pay for it, then you should reconsider buying it,” Brown said. “A sale is not an excuse to overspend.”
2. They do not put a budget per gift
At the beginning of the holiday season, I always make a list of people I want to give gifts to, but I never set a price on how much I want to spend on each person. Brown says it’s important to set a gift budget.
“If you don’t have a strategy for how much you’re going to spend, trust me, all the flashy ads and guilt-ridden commercials will make you feel like you hate your kids if you don’t buy them a $400 gift,” Brown said. “Set a budget and stick to it.”
3. They sign up for store credit cards
While it can be tempting to sign up for store credit cards for an extra discount, financial planner Chuck Zuzak said there are risks to signing up for many new store credit cards because of attractive financing terms during the holidays.
Zuzak said opening many store credit cards can result in many changes to your credit history, which will stay on your report for 24 months and could lower your
“Also, many people are poor at estimating their monthly cash flow and think they can afford to buy on credit,” Zuzak added. “If money is tight, only buy on credit if you have funds set aside in advance for the cash equivalent purchase.”
4. They choose the buy now, pay later option on purchases
Many stores and online merchants offer the option for people to buy now and pay later, but financial planner Brett Bernstein said that could be a mistake.
“For one thing, they can affect your overall credit,” Bernstein said. “And two, they can sneak up on you and you need to have the cash to pay them off or they can earn significant interest. It can become the gift that keeps costing you.”
5. They miss important year-end financial deadlines
The last few months of the year can be filled with so much excitement that people can forget about important financial deadlines. Financial planner Sergio Garcia said missing these deadlines can be a costly mistake.
Garcia cited forgetting to file his taxes if he planned an extension through October, or missing the Jan. 18 deadline to file his fourth-quarter earnings as examples of things clients forget to do during the holiday season.