THE BLOG
12/08/2011 01:57 pm ET | Updated Feb 07, 2012

Five Spending Tips for a Stress-Free Holiday Season

It seems to happen every year -- no matter what we budget, many of us get caught up in the holiday spirit and end up spending more money than we can really afford to.

Here are five tips to keep your holiday spending in check and your budget intact. Use these tips and tricks to combat the games Madison Avenue -- and your mind -- play on you:

1. 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.

2. 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.

Surprising 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.

3. 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!

4. 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.

5. 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.

Ten 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.

This allows you to pay cash for both routine purchases and inevitable emergencies, and avoid all bank and credit card debt.

Learn more about How the "10/10/10" Formula of Savings Rescues Many Overstretched Family Budgets.

As a consultant to financial advisors, Pamela Yellen investigated more than 450 savings and retirement planning strategies seeking an alternative to the risk and volatility of stocks and other investments. Her research led her to a time-tested, predictable method of growing and protecting savings now used by more than 400,000 Americans. Pamela's book, Bank On Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future, is a New York Times Bestseller. Learn more at www.BankOnYourself.com