Layaway Helps Your Brain Budget

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As Salvation Army bells ring through crowded parking lots and wreaths deck storefront windows, stores are looking for new ways to help struggling customers fill their stockings this holiday season.

In this credit-shy economy, layaway has emerged as Santa’s latest little helper. (Layaway allows customers to pay for an item in installments, though the customer doesn’t take the item home until it’s fully paid—a payment plan that tends to be favored during tough economic times.)

Many major stores—Best Buy, Sears and Walmart, to name a few—are offering in-store holiday layaway programs this season, and elayaway.com (“the smart way to plan and pay”) is available for Internet shoppers at over 1,000 online retailers.

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For budget-conscious shoppers, layaway can be a great alternative to credit. “People are being more careful with their money, and layaway is another way to do that,” says YouBeauty Psychology Advisor, Art Markman, Ph.D. “At no point do you feel like you’re paying an overwhelming amount of money.” 

To participate in Walmart’s layaway program, for example, you pay a 10% deposit and a $5 nonrefundable service fee (standard practice for most layaway programs), then you pay off the rest on your own schedule.

Of course, the most financially savvy option is to save your money in the bank until you’re ready to pay in full, but “a lot of people are really bad at saving,” says Markman. Between that lipstick you just had to buy and that gorgeous new winter coat (it was 50% off—a steal!), the savings you earmarked for holiday gifts wind up slimmer than expected. 

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“It’s hard to do long-term budgeting,” says Markman. “The short-term is always more appealing, and we don’t do a good job being able to forecast what is going to happen in our economic future.” Say the oven breaks down or the car needs a tune-up, layaway offers an out. For a cancellation fee ($10 at Walmart), any payment can be fully refunded. 

Layaway is better for your psyche, too.