NEW YORK (MainStreet) As the holiday shopping season begins, setting a budget before you hit the stores puts you on track to enjoy the holidays debt-free.
With 140 million people expected to shop on Black Friday weekend, according to the National Retail Federation, it's tempting to spend beyond your means, especially as retailers pull every lever to not only lure you into stores, but also keep you there longer.
On top of this, slow GDP growth, stagnant wages and unemployment add to the economic storm, prompting retailers to brace for a lackluster holiday shopping season.
When it comes to developing a budget, some research and planning go a long way.
1. How much will you spend?
Entering the holiday season without a specific spending limit is bound to put you in debt, making for a rude awakening when the bills are due.
Figure out whom you'll be buying gifts for, and make a strict spending cap per person. Add up this figure, plus a 10 to 15% cushion, and that should be your final holiday shopping budget.
Also, it's not just the big-ticket items you need to budget for. "Don't forget about little expenses that can add up, such as food for entertaining, groceries for baking or holiday treats, postage if you send holiday cards and home decorations, to name a few," says Gerri Detweiler, director of consumer education at Credit.com.
2. Set some cash aside
Using cash is a guaranteed way to stay out of debt. Financing your holiday shopping using credit cards is fine if you pay off the balance in full.
Many consumers plan to do this but end up falling through on this plan and become slammed with interest expenses. Why spend $500 on gifts this season and then get hit with a 25% APR? That's throwing money down the drain.