Black Friday and Cyber Monday have come and gone. So you may think that setting limits on holiday spending is a lost cause, right?
Not so, said Jamie L. Clark, a certified financial planner in Seattle. The December holidays are still weeks away. “It’s never too late to make a plan.”
Chuck Howard, an associate professor of business administration at the University of Virginia’s Darden School of Business, said research suggests you’ll spend less by setting a holiday budget that’s “optimistically low.”
That’s because even when compliance with budgets is weak, setting stricter, even somewhat unrealistic budgets tends to lead to lower spending, according to a study he helped write on the influence of budgeting on personal spending.
Dr. Howard cited this example. Say you usually spend $500 a month dining out. You may think a realistic budget is $400 a month. But if you really want to cut back, you should set a budget of, say, $250. That way, if you spend $350, you’ve still spent much less than you used to.
A tight holiday-spending limit serves as a reference point, he said, and even if you surpass it, you’ll probably spend less than if you had set a higher limit or hadn’t set a budget in the first place.
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