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Make the most of your budget this holiday shopping season


It's the holiday season, and, for a lot of people, that means parties, spending time with loved ones and, yes, shopping.

KRISTIN O'KEEFFE MERRICK: I think it can be really overwhelming, and you almost feel a compulsion to go and buy the things that maybe you don't even need. Oh, well, if this store's having a massive 70% off sale, I must go buy all the things at that store that I didn't even know that I needed before.

DEGGANS: That's financial adviser Kristin O'Keeffe Merrick. She knows the holiday shopping season, filled with the promise of big sales and can't-miss deals, is really overwhelming. But there are ways to manage.

MERRICK: So one of the first things that I've been advising to everyone is to create some version of a strategy for the holiday season.

DEGGANS: This can be as simple as creating a list of what you really need for the holidays to prevent overspending.

MERRICK: What I've been doing is creating almost, like, a Google Doc - 'cause I have a Google Doc for everything in my life - and, you know, who am I buying gifts for? Am I throwing a party? Am I hosting? What do I need to do - plan for spending in terms of all these different categories, and then trying to assign some version of a budget to that.

DEGGANS: Once you have a budget in hand, stick to it. Merrick recommends even using cash to make your purchases.

MERRICK: When you put cash in someone else's hands for a product or a service that you're paying for, there's a lot more meaning to that transaction. And when you do that, I think you have a lot more of a memory of, oh, wow, OK, $70 actually means something as opposed to when you swipe your credit card.

DEGGANS: But if you must use a credit card, do so responsibly. Merrick says you should try to pay it off as quickly as possible.

MERRICK: Interest is quite high on these cards now. It's gone back up and it hovers around 20 to 25% on APRs for credit cards, which is really, really high. And so if you can be really thoughtful about not carrying debt into the new year, I think you'll be a lot better off for it.

DEGGANS: Another trick - coupon codes, but only for items that you need. Remember that budget we mentioned earlier? For this, Merrick also has some tips.

MERRICK: I mean, I use this system called Honey that - whenever I check out online, it will actually run a whole bunch of coupon codes for me before I check out, so it tells me whether I've missed a code or not. Like, hey, we just found you $10 off. Those codes are really, really important when you're checking out.

DEGGANS: And when it comes to what to avoid this holiday shopping season...

MERRICK: Buying things that you don't need for yourself just because they're on sale - that's a big problem this time of year, is everyone gets so taken by the sales that they forget that they actually don't need the things that they're buying. So if you find that you're just scrolling and putting things in a shopping cart for the sake of the fact that, oh, they're cheap - not a great strategy.

DEGGANS: But even with tips from a personal finance guru, this year's holiday shopping season might be tricky for some folks. That's because inflation is still pretty high, as are interest rates. So Merrick recommends going into the new year with some knowledge in hand.

MERRICK: I'm a big proponent of spending some time in December and doing a bit of an audit on what your year has looked like. Looking back to see, you know, what good and bad has been accomplished in 2022? Was I able to save anything? Did I overspend? Did I make some mistakes here and there?

DEGGANS: Merrick says this will give you a sense of your financial health, and that makes it easier to set some goals.

MERRICK: Make a list of the things that you really want to accomplish in the year and how you're going to accomplish them. Just saying I want to save $10,000 is not a goal, but saying I want to save $10,000 by making sure that I save $500 a paycheck over the next course of how many weeks and months - that is a much more specific, achievable goal.

DEGGANS: That's financial adviser Kristin O'Keeffe Merrick sharing tips on how to maintain your finances this holiday shopping season.