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Protect your savings from the holidays

December 09, 2011

By Marcia Passos Duffy | Money Rates Columnist

Christmas is still weeks away, but you may have already found yourself veering off your shopping list, impulsively buying unneeded "good deals" for yourself or family and friends.

If you keep thinking, "Why not? It's Christmas!" when you pull out your wallet or credit card, you may be under the spell of a hijacked holiday brain, says Leslie Greenman, financial advisor and author of the new book, "Dating Our Money."

Greenman writes that our "holiday brain" convinces us that it is okay to overspend because Christmas only comes once a year. And the thought behind holiday spending--the notion that the gifts you buy will make others happy--only worsens things.

So how can you get control of your "holiday brain" and keep spending under control--and maybe even toss a little extra into your savings account? These tips can help:

1. Rely on your budget

While 52 percent of people plan to make a holiday gift budget this year, a Consumer Reports poll found that making a budget and sticking to it are two different things. During the 2010 holiday season, for example, those polled said they anticipated spending a median of $457 on gifts. But a January follow-up poll showed 45 percent who made a budget exceeded it.

The best way to stick to a budget is to rely on cash and leave the credit cards at home. Map out your shopping plan, make a gift list, including how much you can spend on each gift, and stick to it. You might even want to try to go under-budget and put the extra funds into a money market account for your summer vacation fund or another long-term financial goal.

2. Don't get carried away by sales

Many can't resist those rock-bottom deals during the holiday season, but remember that your list is your guide--and that sale item may not be on your list or in your budget. If it is not on your list, don't buy it, even if it is a great deal. Remember, there will be plenty of after-Christmas sales to get items that you may need--use that time until Christmas to think about whether you really need that item at all.

3. Don't shop for yourself

A recent survey by the National Retail Federation showed that the average shopper spends $130.43 on themselves while holiday shopping. Instead, take that money, hunt down the best savings account rates you can find, and park that cash there. The extra savings and interest will be a gift you can appreciate throughout the new year.

4. Shop when you are happy, not sad

The holidays can be joyful, but they can also be stressful and even sad if you are divorced or have lost a loved one. Studies show that we are willing to spend more when we are sad, so avoid shopping when you're feeling down. Instead of shopping, curl up with a holiday movie or do something fun with your kids. Save the shopping for when you are in a better mood and your checking account will likely thank you.

5. Spend time, not money

It is natural to want to give gifts to those you love. But consider this: holiday shoppers will spend about 19 hours shopping and three hours standing in check-out lines this holiday season, according to a Consumer Reports poll. Since time and money are at a premium during the holidays, it may be just as meaningful to simply spend some of that time with your friends and family. Instead of a gift, have coffee with a friend or go to a movie. Or treat your family to some home-cooked meals and holiday cookies.

Just because the holidays are here doesn't mean that overspending is an inevitability. Once the holidays are over, you'll be happy that you resisted the temptation and kept your credit cards at bay.

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