- The Washington Times - Monday, November 3, 2003

Amie and Stephen Erickson are budget-friendly. It’s a good thing considering the Ashburn, Va., couple have about 30 family members and friends to buy gifts for this holiday season.

As that jolly time of the year quickly approaches, the Ericksons are stress-free preparing to stick with a $700 budget to make sure they don’t accrue unwanted debt.

“For us, it’s a way to make sure we’re meeting our savings goals and to know we’re not compromising in other areas,” Mrs. Erickson said.

For some consumers, holiday budgeting has become a necessity to keep stress levels down and stay on track with their overall savings and financial future.

“It goes back to convenience,” said Randa Ghnaim, director of corporate relations for Visa USA. “Everybody is pinched for time with work and family. The more they can find convenience the better off they are overall.”

Financial groups and advisers insist consumers make a budget — allotting money for each person on the list and sticking with it.

When making a list, consumers should be sure to add in hidden costs such as travel expenses, postage, extra groceries for holiday meals and charitable donations — all costs that creep up during the season. Consumers can use computer software or Internet tools found on sites like www.practicalmoneyskills.com to organize their spending.

More than 50 percent of consumers start organizing their holiday budgets less than two months in advance, according to a survey by Visa.

“You should invest a little time now to determine what your costs are going to be,” Ms. Ghnaim said.

Keeping track of receipts and doing a reality check two weeks before the holiday will help eliminate overspending, according to the American Bankers Association (ABA).

“Marketing gets more intense closer [to the holidays] so the temptation increases,” said Tracey Mills, an ABA spokeswoman. “Know exactly how much you have to spend and your chances of overspending diminishes.”

On average, consumers plan to spend about $672 on gifts, decorations, greeting cards, food and candy, according to the National Retail Federation. In addition, more than half of consumers expect to spend about $147 on items for themselves.

“Consumers are already consciously planning [to spend on themselves] so that leads me to believe that most are budgeting — not necessarily on paper but definitely in their minds,” said Ellen Tolley, spokeswoman for the retail association.

An ABA survey on the 2001 holiday season found that 42 percent of consumers stuck to their holiday budget. About 13 percent reported being under budget, while 11 percent reported being over budget. The survey also revealed that 32 percent of consumers made no holiday budget.

“Consumers are making a conscious effort not to overspend,” Miss Tolley said. “They do have a little more money to spend [this year] but they’re being careful when it comes to holiday shopping.”

Mrs. Erickson said she has been shopping for holiday gifts throughout the year. She keeps an eye out for the perfect gift, and if she has a certain amount allotted for someone she makes sure she spends all of it.

“I definitely spend the budget,” she admitted. “I’m looking for the perfect gift, not the perfect sale.”

The Ericksons, who had the same holiday budget last year, have even set aside funds for hidden expenses such as stamps and gift wrapping.

Last year Visa kept track of three women’s spending during the holidays and found the biggest hidden expenses were charitable contributions, extra groceries for parties, clothing for special events, travel costs and tips.

The ABA suggests shoppers build a cushion ranging from $20 to $100 to cover any extra costs that weren’t originally included in their budget.

Ms. Mills said budgeting, including those extra little costs, will help consumers avoid debt in the new year.

“The holiday bills come in in January,” she said. “If you haven’t budgeted, it could be a real shock.”

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