How to save money this holiday season

Brent Arends, who writes R.O.I., or Return On Investment, daily for the Online Wall Street Journal, has some ideas.

1. Set a budget. And stick to it! Too many people blunder into Christmas backward, with an open budget and an open wallet. As for sticking to a budget -- everyone has preferences, and I have mine. I leave the plastic at home. Only take cash to the mall. If you can't spend the money, you won't. Simple. Willpower doesn't even come into it.

2. Negotiate a gift truce. "Lose the guilt on how much you might not spend this year," says Elaine Scoggins, a financial planner in Seattle. "It's a rough year for lots of people. Think about how few of last year's holiday gifts are now really valued by you, your family or your friends. Can you even remember what you gave? What you received?" If you can't negotiate a truce, dial down the number of presents. "Consider pulling names so you are only buying for one person instead of the whole family," says Lauren Lindsay, a planner in Covington, La.

3. Focus on experiences, not things. Give cooking classes. A spa treatment. Tickets to a game. Studies and common sense consistently show that these get a lot more bang for your buck than mere store-bought items. Why? Psychologists find that experiences tend to gather luster in our minds over time.
Meanwhile, stuff gathers dust in a hall closet.

4. Give cashless gifts. The cliches are right. It's the thought. Ms. Lindsay in Louisiana agrees. "Give of yourself," she says. "Baked goods, soups, flavored olive oil, knitted or sewn items, pesto...these are all lovely gifts to receive, and cost less to make than to buy." She recalls "when my friends were having babies and I was still single, I would give them babysitting time as presents." Financial cost: Zero dollars. Value: Priceless.



5. Be a smart shopper. Rick Kahler, a financial planner in Rapid City, S.D., says we are especially vulnerable to making money decisions blindly at this time of year. "We are surrounded by expectations and pressures about 'ideal' holiday celebrations, with the perfect gifts, the perfect decorations and the perfect foods." He says it's particularly important to recognize the subconscious beliefs trying to push us around. 

And go to the store the day after Christmas to buy wrapping paper and cards 75% off...for next year.