Can you believe that it is already November? I feel like we just celebrated Christmas and now we are approaching Thanksgiving. Time seems to fly and if you are like most shoppers you probably tend to wait till the last minute to get those presents for your family. Well, here are a few ways you can be smart about shopping on a budget even on a time crunch!
1. Set a fixed budget then work backwards. Start with a fixed number you can afford to spend on everyone and then starting with the most important people (spouse, family members, nephews and nieces, etc.) list out how much you are willing to spend on them. Then after you have those numbers use the remaining money to buy for those who are of lesser priority. You could even put it on a spreadsheet if you are more visually and technically inclined.
2. Know what you’re buying. Don’t roam around a mall looking for gift ideas. Instead, know what you will be purchasing each and every person so you won’t be lured in to spending more money than you budgeted. You will also not waste your time on your unnecessary shopping. Remember: your time is money too!
3. Avoid the credit card! Or, if you must charge, calculate the ACTUAL cost of the item when everything is all said and done. You will need to multiply the retail price of an item with the interest rate that credit card is charging you. That way you will know exactly how much to budget for.
Here’s an example:
To figure out how much you will actually be paying when you use a credit card you must multiply the retail price x 1 (the interest rate.)
So, if an item costs you $100 retail with a 15% annual interest rate you are actually paying an estimate amount of $115. ($100 x 1.15)
Whatever interest rate your credit card has you would multiply it by the retail price of the gift you are planning to buy. Now, this does not take into account whether you may or may not have debt already on your card. This also assumes that the payments are far above the minimum. If you are merely paying the minimum payment each month the actual cost will be significantly greater than if you pay off more than the minimum. This formula is also based on a one year plan to pay it off. This method depends on your current debt, the monthly payments you put toward it, and how fast you pay it off. Therefore, the actual cost could be less or it could be more.
Tracking your spending is never fun, nor easy. But putting forth some leg work now could really save you some sweat later; especially when you see that credit card bill arrive after the holidays. You want the holiday season to be filled with joy and lots of memories with family and friends. You most certainly don’t want to laden down with debt or buy things for people you cannot possibly afford.
Budget now, track your actual cost, and manage your time well! You will be thankful you did.
Like Will Smith so eloquently put it, “Too many people are buying things they can’t afford, with money that they don’t have… to impress people that they don’t like!” You may like these people, but you won’t like yourself after you find yourself in a mountain of debt!
Featured image by https://dribbble.com/subdued7