How to Avoid Overspending on Black Friday

No, you’re not imagining things. Black Friday isn’t just a day anymore, it’s practically a whole season, and the ads for this so-called shopping holiday are starting earlier than ever.

Despite a mix of inflation and high interest rates, Black Friday spending has increased in recent years, even when adjusting for inflation. How do you resist the spending craze? Here are a handful of ways to stop yourself before you start.

1. Don’t believe the hype

Black Friday deals have a way of casting a spell on holiday shoppers. One way they do it is by using FOMO marketing, which plays on your fear of missing out on things like limited-time offers.

One way to break the spell is to acknowledge that most Black Friday and Cyber Monday deals simply aren’t that great. For the 2023 holiday shopping season, an Adobe study found that discounts peaked at an unimpressive 31%.

Think of it this way: If a 30% discount doesn’t normally send you into a spending spree, why should Black Friday be any different?

When you see an advertisement for discounts “up to 75%,” take a pause. Sure, you might find one item in the bin that’s marked down 75%, but the average discount is far less impressive.

2. Disconnect

One of the leading causes of Black Friday spending is all the targeted ads and personalized product recommendations we get. These marketing tools played a significant role in boosting holiday spending in 2023, but they don’t have to take your budget down this year.

Here are a few ways to cut back on the ads:

• Unsubscribe from retailer emails
• Change your ad preferences on your social media accounts
• Clear cookies and browsing history from the cache in your web browser
• Update the privacy settings to block cookies on your web browser and your apps
• While browsing online, click on Your Ad Choices icons to choose which types of ads you want to block
• Opt out of tailored ads that are delivered through connected TVs and other devices

You might want to have your children take these steps, too. The fewer ads they see online, the less they’ll pressure you into overspending.

3. Set your spending limit

Instead of letting the sales dictate your spending, let your budget make the call. Look at your savings to see how much money is available for gifts.

If there’s not much, plan how to save for gift purchases by Black Friday. Once you’ve worked out your plan, set a hard spending limit.

With a small budget, you might want to avoid Black Friday altogether. Instead of being wooed by discounts on pricey tech gadgets, gaming consoles and appliances, plan to give affordable but meaningful gifts like framed photos or a hand-written book of family recipes.

4. Make a wish list

Get specific about who you want to buy gifts for, including friends, family and other people you might see during the holidays. Then, decide how much of your gift budget you can allocate to each person.

Instead of waiting for Black Friday ads to inspire (pricey) gift ideas, write down options that might fit your price range.

Here are a few popular gifts from 2023 and some budget-friendly alternatives you might opt for:

5. Make it a group thing

Shorten your shopping list by swapping individual gifts for group presents. For example, you might suggest a White Elephant gift exchange at work or a Secret Santa approach for your family get-together.

If you have several nieces and nephews, opt for an interactive present like a karaoke machine instead of a separate present for each child.

Not only can group gifts save you money, but the other people on your shopping list might be relieved by the idea of spending less money.

6. Look up prices early

Promotions and sales are the main reason people shop on Black Friday. However, some retailers use deceptive practices to make you think items are on sale, like marking up prices beforehand or calculating the discount based on the MSRP instead of their regular price.

Before you start shopping, find the market value of the gifts on your list. That way, you’ll know when a sale is really a sale. You can also look up some retailers’ Black Friday prices in advance, which lets you decide if a sale-price gift truly fits into your budget.

7. Stay away from Buy Now, Pay Later

Buy Now, Pay Later (BNPL) is a payment option that lets you buy a gift now and pay it off over time. This option, available from companies like Klarna and Affirm, grows in popularity around the holidays.

November was the biggest month of the year for BNPL transactions in 2023, and it’s expected to be an even more popular choice this year.

But most people aren’t aware of the major drawbacks associated with BNPL purchases, including:

• It turns your transaction into a loan with late fees
• It tempts you to buy items you can’t afford
• Missed payments might hurt your credit scores
• Shoppers often develop a habit of using BNPL repeatedly

With most BNPL loans, the first payment is due in two weeks. As a shopper, it’s best to assume that if you don’t have the money available now, you won’t have it in 14 days.

8. Use credit cards wisely

Credit cards can be a powerful tool for managing your spending, but only if you use them strategically.

Many shoppers fall into the trap of using high-interest credit cards during Black Friday, believing the rewards points will make up for the overspending. However, racking up a balance can lead to more financial stress, especially if you can’t pay it off right away.

Instead, consider using a credit card designed to help you take control of your finances rather than one that tempts you to spend more. The Prosper® card, for instance, isn’t a rewards credit card, but it can be a great tool to manage your spending responsibly.

It encourages disciplined usage, focusing on helping you avoid debt traps and unnecessary purchases. Using a credit card with these strategies in mind can help you stay in control and keep your holiday finances on track.

9. Make other plans

If all else fails, plan to do something other than shopping on Black Friday. After all, you’re probably with people you don’t get to see year-round.

Instead of spending money together, treat it as the second day of your holiday. You might schedule an outdoor event with your family where you won’t be scrolling through your phones.

If you’d rather stay inside, make it a day of festive activities. You can make holiday cards, decorations or gifts, watch movies, play games or even start organizing your Secret Santa party.

The Prosper® Card is an unsecured credit card issued by Coastal Community Bank, Member FDIC, pursuant to license by Mastercard® International. 

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