This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

Pamela Yellen

To purchase a copy of the book:

Bank On Yourself: The Life-Changing Secret to Protecting Your Financial Future

Six Steps to Keeping Your Holiday Spending in Check and Stay in the Black on Black Friday

Create a Holiday Strategic Spending Plan and Stick With It
It sounds so simple, but it’s surprising how many people go into the holidays with a wish list in one hand and a credit card in the other, without any idea how much they will end up spending. It’s no wonder so many people wind up falling into a hole of debt and having to spend much of the next year clawing their way out. Much like diets, budgets are no fun.  But a Strategic Spending Plan can be.  First, get clear on how much you can spend on each person on your list. Don’t forget all the other holiday expenses too, like cards, decorations, wrapping paper and extra goodies for holiday meals and get-togethers. Having a reasonable plan to start can help you keep holiday spending and stress in check so you can enjoy the season more.

Pay for Holiday Gifts With Cash
People paying with cash spend 20 percent less without feeling deprived, according to research by the National Foundation for Credit Counseling. It’s better than using a check or debit card, because even the sight of a credit card logo on most debit cards excites consumers, studies show. So leave those cards at home under lock and key.

Tip: If you can’t afford to pay off your credit card this month, then you can’t afford to add much – if anything – to it in December.

Ask Yourself Why
Ask yourself why you want to buy something – whether it’s for yourself or as a gift. You may realize that you’re being manipulated into it by advertisements. Just that awareness is often enough to quench the thirst. Before each purchase, get yourself off emotional auto pilot. Take a deep breath (and some time) to consider whether that expensive gift is really the best purchase you can make for the person on your list, or for yourself.

Tip: Clench for savings! Making a fist or flexing your biceps has been shown to help people resist at the moment they’re standing in front of a tempting purchase.

The Gifts People Remember the Longest are Often Free
Think about what you might give that is free or low cost that would bring as much or more long-term pleasure. Can you remember what holiday gifts you received five years ago? If you’re like me, you probably don’t. But I still treasure the memory of a desert hike our family took during one holiday years ago instead of exchanging gifts. Cost: Absolutely free!

Remind Yourself of Your Goals
This helps you realize that every time you don’t spend money, you’re closer to reaching your goals. You’ll make spending decisions today that not only build happiness for you now, but also ensure a happy future.

Use the “10/10/10” Savings Formula
Most Americans overspend, take on too much debt and fail to invest wisely for retirement. Using the time-tested 10/10/10 Savings Formula year round puts you in control of your money and finances. Here’s how it works: 10 percent of your gross income should be set aside for short-term needs, such as a vacation and holiday gift-giving; 10 percent for anticipated mid-term needs and potential emergencies, including a new car, replacement of major appliances, a new roof, and college tuition; and 10 percent for long-term retirement planning.

For more information: