As the festive season approaches, many Americans are grappling with the challenge of enjoying the holidays without plunging into financial distress. With 40% starting the holidays with more credit card debt than the previous year, as revealed by a D.A. Davidson survey, and the National Retail Federation (NRF) reporting an average spending of $826 on Christmas festivities, the question arises: How can we save our wallets during the holidays?
Saving our wallets this holiday season
Jeannie Dougherty, a certified financial coach, says it’s important to create a holiday spending plan and stick to it.
“A holiday spending plan is about finding the joy in your heart while protecting your wallet from overspending. This plan should have a spending goal that should not be exceeded. Folks get into trouble and can easily slide into debt during the holidays when they overspend, open up new lines of credit, or make promises to their loved ones based on what they want, not what can be spent. When no spending plan is in place, people will likely overindulge, causing problems months down the road,” she says.
What are some tips people should be aware of when considering the cost of the holidays and when coming up with a holiday spending plan?
Jeannie shares, “My tips for creating a holiday spending plan include developing a spending goal or limit. I also recommend creating a document or spreadsheet that tallies up all your expenses, including holiday lights, gifts, grocery bills for dinners or cookies, and any other expenses. This allows people to be aware of what they are spending. It also allows people to be more organized and consistent with spending and gift-giving.”
In addition to setting a spending plan, there are several other strategies that can significantly mitigate the financial strain induced by the holiday season. One such strategy is prioritizing expenses. It’s important to determine which elements of the holiday are most important to you and allocate your funds accordingly. This might involve choosing to spend more on a family dinner rather than on expensive gifts, or vice versa.
Another effective approach is to embrace creative gift-giving. Consider giving handmade gifts or experiences instead of store-bought items. These gifts often hold more sentimental value and can be more cost-effective. This approach not only saves money but also adds a personal touch to your gifts.
Comparative shopping is also a key strategy. Take advantage of sales and compare prices before making any purchases. There are numerous online tools and apps available that can help you track the best deals, ensuring you get the most value for your money.
Avoiding impulse purchases is crucial. While it might be tempting to buy items that are not on your list, these impulse buys can quickly add up and derail your carefully planned budget. Sticking to your list is essential to maintain control over your holiday spending.
Sometimes, it’s necessary to revisit and possibly modify traditional holiday practices, especially if they are expensive. Traditions are important, but it’s okay to reassess and alter them to fit within your current financial situation. This could mean scaling back on certain aspects of the celebration or finding less expensive alternatives.
Open communication with family and friends about gift expectations can also be very beneficial. Setting a spending cap for gifts can help ensure that everyone is on the same page and can prevent overspending. This approach can help maintain the holiday spirit without putting financial strain on anyone involved.
Lastly, it’s beneficial to start planning for next year’s holiday season early. Consider setting aside a small amount of money each month specifically for holiday expenses. This proactive approach can help prevent the stress of last-minute holiday financial crunches and ensure a more relaxed and enjoyable holiday season in the future.