Don’t let holiday spending overwhelm you in these tough financial times.

Prepare a holiday budget using realistic expenditures and stick to it, advises Debra Pankow, North Dakota State University Extension Service family economics specialist.

Some financial planners recommend spending no more than 1.5 percent of your annual income. For families with an annual take-home income of $50,000, that means limiting holiday spending to $750.

Pankow says the first step in preparing a holiday budget it setting spending limits. Families can start with a family meeting to discuss the amount available for holiday spending, priorities and budget items.

Sean Brotherson, family science specialist for the NDSU Extension Service, suggests that adults need to establish realistic holiday spending guidelines first. Then adults can hold a family meeting and ask children or other family members to help prioritize purchases or gifts. Brotherson emphasizes that family meetings to guide holiday efforts also might encourage planned family time, personalized or inexpensive gifts and family activities to enjoy during the holiday season.

Families need to consider what they want to spend on each person, the specialists say. Make sure to include holiday giving. If the amount adds up to more than they can afford, they need to lower it.

People also need to make a list of what they plan to buy and take that list with them when they go shopping. Then they need to check that list often to make sure they aren’t buying extra items that will send their spending over their limits.

Here are some other ways Pankow says will help families stay within their holiday spending budgets:

• Think creatively about how to reduce costs. People should consider making gifts or giving a gift of service, such as gardening or painting. Family members also could draw names instead of giving everyone a gift.
• Pay for gifts with cash instead of a credit card. This helps reduce spending because people think more carefully when paying with cash. Those who do buy on credit should keep a list of the expenditures as though they were writing checks because that will help them stay within their budget.
• Open a Christmas or Holiday Club savings account and deposit money throughout the year to make sure cash will be available in time for next year’s holiday shopping.

Pankow says people also need to be aware of spending patterns that could lead to overspending, such as:

• Trying to impress others or seeking other people’s approval
• Responding to sales pressure or buying something because someone suggested the purchase was a good idea
• Making a purchase because it’s something the family always has done
• Being swayed by advertisements
• Making impulse buys instead of comparison shopping
• Thinking that spending money will help you feel better when you are depressed, angry or sad
• Being unable to say no, especially when children are asking you to buy something for them
• Shopping aimlessly without a clear purpose or idea of what you wish to buy and how much you have committed to spend

For more information about making better financial decisions, visit the NDSU Extension Service’s family economics Web page at http://www.ag.ndsu.edu/money/.

NDSU Agriculture Communication