The holidays are a joyous—and potentially expensive—time of year. Last year, consumers said they planned to spend an average of $699 on gifts, but they admitted to shelling out an average of $811 instead, according to a Consumer Reports survey. Gift giving doesn’t have to empty your wallet if you follow these tips from the Pennsylvania Institute of CPAs.

Pay Cash

If you decide in advance how much you want to spend, and leave the house with that amount in your pocket, there’s no way you can overspend, if you stick to cash outlays for all your purchases. Leave your plastic at home and vow to stop spending once you’ve used up your cash on hand.

Avoid Credit Card Sign-Up ­“Discounts”

Offers of a 10 or 20 percent discount on your purchase if you open a store credit card account are common. You’ll probably be receiving many such offers during the holiday season. This may be tempting, but it’s best to avoid them. Store credit cards often carry very high interest rates. If you run up a large balance, you may find yourself paying off interest charges that are much higher than the initial “discount” you receive.

Look Into Layaway

When people don’t have enough cash to make a purchase, they usually turn to a credit card. This year, consider another option: layaway. In a layaway plan, you typically put down a percentage of the item’s total cost, then pay a little each week until you’ve covered the full price. At that point, the item is yours, and you don’t typically incur any interest cost. Layaway also prevents you from continuing to pay off your holiday impulse spending well into the new year. To be sure you understand the process, it’s a good idea to ask for a written copy of the store’s layaway policy.

Watch Out for Warranties

When you purchase some items, particularly electronics, salespeople often urge you to buy an extended warranty to cover repairs or replacements down the road. Before agreeing, find out the total cost of the warranty. A deal that cost a few dollars a month could end up costing you hundreds of dollars over time once you add it up. It is almost always a better idea to set aside the money you would have spent on a warranty in an emergency fund so that you can buy a replacement if necessary.

Shop Sales Now

Once the holiday season is over, stores immediately discount all their seasonal merchandise, including gift wrap, greeting cards, decorations, and more. If you can comfortable afford it, shop after the holiday and pick up everything you need for next year at sale prices. The 2011 holiday shopping season is still a year away, but you can start saving money now on some of the items you’ll need!

Turn To Your Local CPA

Are you seeking advice about smart ways to spend your money? Remember that your local CPA can help. He or she can help you make decisions about all the financial questions you face. Visit for more information.

(The CommonWealth Tips columns are a joint effort of the AICPA and the Pennsylvania Institute of Certified Public Accountants, as part of the profession’s nationwide 360 Degrees of Financial Literacy program.)

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