Carrie Schwab Pomerantz

It is the season of giving. In the next three articles, I'm going to talk about ideas for giving in every sense of the word - giving to our friends and families; giving the gift of knowledge (a gift we should all give more often to those we care about); and giving to charity. This week features the joys and dangers of present giving.

The old cliche seems even truer this year: Christmas comes earlier every year. The weeks between Thanksgiving and Christmas represent the busiest shopping season of the year, with retailers of every kind working overtime to convince us that the secret of holiday happiness is in buying and giving more. We all know, philosophically, the speciousness of that argument, but it's hard not to get caught up in the holiday frenzy.

Now I don't want to come off like Ebenezer Scrooge. Holiday shopping is fun, but don't let the spirit of the season wreak havoc with your finances. There's nothing worse than the post-holiday remorse you may feel when a flurry of credit card bills arrives in January. Here are some simple steps you can take to help approach the holiday shopping season prudently:

- Make a budget: Start by determining a budget for holiday shopping, a budget that's reasonable for you. Be honest with yourself about how much you can afford to spend, and don't feel pressured to give beyond your means. You don't want to break the bank just because it's the holiday season.

- Be cautious with credit cards: Credit cards are convenient and useful, but it doesn't help you curb the impulse to spend. Consider paying for your presents with cash. An eye-opening study at Massachusetts Institute of Technology confirmed that people are willing to spend considerable more money on a particular item when they pay with credit instead of cash. In a similar vein, be wary of store promos that will entice you to open yet another credit account with a one-time discount. Often these accounts carry a hefty interest rate, and you could find yourself left with a very expensive debt load.

- Think about shopping online. Some people are more prudent shoppers when they shop online. If window-shopping and crowded malls trigger your buying impulse, consider doing more shopping on the Internet.

- Make a list: Pair your gift list with your budget, and you'll have a good tool for making decisions. If your list is long and your budget is small, be creative. Baked goods are always welcome in the Schwab-Pomerantz household.


Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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