I spent WHAT on holiday gifts?! Follow these 5 rules to finance your holiday gift giving

Christmas shopping? Cue the stress headache.

But it’s not just the busyness of the season that has you popping the Advil. According to a survey by information services company Experian (yes, they know your credit score), holiday spending – and resulting financial stress – are expected to go through the roof this year.

More than half of us admit that we not only spend too much but also feel stressed as a result. Nearly half go on to say that the extra expenses make the holidays difficult to enjoy. Worse, a third of us have even gone into debt due to unexpected holiday purchases.

With the National Retail Federation reporting that consumers will spend an average of $935.58 this year during the holiday shopping season, it’s a good idea to step back and apply some good old-fashioned financial common sense, said Dr. Simon Medcalfe, an associate professor of finance at James M. Hull College of Business at Augusta University: “The basic rules of purchasing and financial planning hold, even during the holidays.”

The 5 rules of holiday shopping

1. Know your limit. Determine the maximum amount you plan to spend this year, and divide that amount among the gifts you need to buy.

2. Expect the unexpected. Your budget should factor in additional expenses that you might not otherwise think about, including items such as holiday cards, wrapping paper and shipping if you plan to shop online. Particularly if you are a little late to the game, expedited shipping can add a hefty amount to the purchase price of gifts.

3. Be wise with credit, or use cash. Buying on credit can make it easy for those expenses to be out of mind until your bill arrives – and you become painfully aware of how much you overspent. If you use a credit card, just be mindful. It’s actually easier to stick to a budget, however, if you make a point of buying your gifts with cash; after all, once it’s gone, it’s gone.

4. Comparison shop for the win. Taking the time to comparison shop both in stores and online can really pay off. The “Shop Small” movement, which encourages shoppers to buy gifts from local small businesses, may not be a less expensive option, but you can spend the same amount on a much more unique and heartfelt gift.

5. Don’t act on impulse. Once you’ve set your budget and completed your comparison shopping, make your purchases all in one day. And then let yourself be done. This will help you avoid the temptation of buying “just one more little thing” over and over again – all of which can add up.

It’s not too early to start planning for next year

However, said Medcalfe, the best rule to apply to your holiday shopping might be this: Start planning after the holidays are over.

“Reverse budgeting involves working out how much you want to save in a particular year out of your income, and that lets you know how much you can spend,” Medcalfe said. “So your spending then becomes the residual as opposed to something you start off with and then your saving is the residual.”

This allows you to work out how much you will have to spend throughout the year on fun, everything from gifts and vacations to going out on Saturday nights. And at the end of the year, you might receive the best gift of all: a nice pot of savings, financial freedom and no more headaches.