Consumers spent an average of $811 on holiday gifts, significantly more than the $699 they initially planned to spend, according to a Consumer Reports survey expected to be released today. About 4 in 5 consumers bought gifts, and in a good sign for discretionary spending, many shoppers bought for themselves, the poll found.

While this sounds good for retailers, spending more than you intended to spend makes it difficult to stick to a budget for Christmas spending. The article continues to say that many people also used their credit cards for purchases. Spending $112 more on gifts than you anticipated can mean the difference between having money for the electric bill or a few tanks of gas. Still the results of the survey are for an average… This does not mean that everyone went over their budget or even those who went over their budget only spent $811. There still may be people who spent well over their budget but had no financial problems. If a person can afford to spend $811 or $5811 on Christmas gifts without causing problems for their budget it’s not an issue, which is where surveys such as these give the wrong impression. A person’s cost of living makes a difference in how and what they can really afford to spend. A free spender who became newly frugal or at least cut back on spending but with a higher income might see spending less than a thousand dollars a bit low for holiday gifts, especially if they have many gifts to buy.

What if you just can’t cut your spending any more than you already have? What can you do? You’ve clipped coupons, make more meals at home and also cut back on discretionary spending.

Stop! If you are making ends meet and have no difficulty paying bills, then stop trying to save more. Save as much as you can without feeling uncomfortable. At a certain point if you save too much it can be addictive like a crash diet but then like a favorite food tempting a dieter, an item may call a save a person’s name and cause the person’s budget to come crashing down around them.

Remember when you were a child and made a list of what you wanted for Christmas? Make a list of things you want. This does not mean that you will buy these things but by making a list much like a shopping list, even if they are things you cannot afford right now will make you consider whether or not the items on your list are necessary. In fact, if you just go shopping online and list items you like, you haven’t spent anything. When you have money and look at the list later, you might look at the list and think  – “why did I want xyz?”

Just as you make a list when you are hungry, you should also make a list when you are planning to go shopping for any other type of item. If you are going to buy jeans have in your mind that you are going to buy jeans, or a black skirt or a bag, stick to that list. Do no go to other part of a store looking for items you don’t need, if you are easily tempted. Some people can go into a store and buy the item they want without feeling pressured to spend extra money.

Economists who have spent most of their time chronicling other recessions say it’s inevitable that pent-up demand will lead to some kind of breakout of spending. The official indicators aren’t there yet, but the stock market is stronger, and the housing market appears to be near bottom, which bolsters confidence.

Breaking out of the saving mold and spending will happen, especially for those who are unaccustomed to saving money, but the conditions must be right. What the right conditions are, have yet to be determined. Saving isn’t a negative part of a budget, it is a necessity like a utility to have a well-balanced spending plan.

Is your spending in line with your income?

Even though there are many people who are saving money and espousing frugality, there are also people who are spending – just fewer of them.

The Bureau of Labor Statistics indicates that the current rate of unemployment is 8.1% as of February, 2009. There are still many people who are employed and making purchases.

But are those purchases in line with their income? I heard a woman say that there are no secure jobs anymore. There are some jobs that are more secure than others, yet having job security does not mean that spending should go uncapped. We have all heard of recommended minimum amounts that people should save yet if everyone paid their bills and saved some with money left over is there a recommended amount that people should spend on discretionary purchases?

Convenience and cost have made many relatively happy to spend on small indulgences, like coffee, dining out and inexpensive clothing & accessories. Now that the cost is more of a factor when people want to save, convenience stores which offer snacks, drinks and other goodies on the go are suffering as well. Thrift stores are booming in the clothing and accessories sections. The other sections, such as books and housewares haven’t seen people bustling to buy as much in the used goods trade.

When people make more, they have more discretionary spending available: More money, more to spend, and more to buy.

Investopedia defines disrectionary spending as: 

…an important part of a healthy economy – people will only spend money on things like travel, movies and consumer electronics if they have the funds to do so. Some people will use credit cards to purchase discretionary goods, but increasing personal debt is not the same as having discretionary income.

A healthy economy would mean spending within limits only if there is enough money there. How much is enough to have for discretionary purposes? And do you have to spend all of your discretionary funds?

Gas and food prices took a big chunk out of discretionary spending, but now that gas prices have almost halved off of their all time highs and managing at the grocery store what will this mean for the economy and unnecessary items?