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Holiday Shopping Starts Soon

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Are you saving enough?

According to ABC News, Americans surveyed by the International Mass Retail Association thought they'd be spending about $849 each on their holiday spending in 2010, but they actually ended up spending $1,067 each—an average of 20 percent more than they had originally planned.

This is a dangerous situation that happens year after year. Consumers set a certain goal for their holiday shopping and then exceed it. And if you spend more than you originally planned to spend, what is the preferred method of payment for that overflow? Credit cards.

Carrying credit card debt from the holiday season into January isn't the best way to start a new year. Adding more debt and interest to your budget is the wrong precedent to set. Instead, you can give yourself a little extra padding by saving more now in your regular savings or holiday club account.

The more money you save, the more interest you will earn. Not only that, but if you don't spend every dime come Black Friday, you can always roll over the extra savings over to the next year. When getting started, a good rule of thumb is to look at your prior five years' holiday spending to see how far over your budget you went. Saving a little more this year will allow you some room to make last-minute purchases by taking advantage of blowout holiday sales, or to make up the difference in any price increases for this season's must-have items. It also allows you to buy a few extra stocking stuffers and makes room for any presents or hostess gifts that you might not have budgeted for in the past.

It's fun to commemorate the holiday season by exchanging presents with family and friends, having big family gatherings and dinners, and taking part in activities you might not do the rest of the year. But without proper planning, saving and exercising some restraint, you could end up paying big for all that celebration well into the next year. And the financial ghost of holidays past is no specter you want at your next family dinner.

If you have questions about how you can plan and save for your holiday spending, stop by or give us a call.

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