While the holidays are most definitely a joyful time of year, they can also be a stressful time when it comes to finances. With inflation on the rise, the task of family holiday shopping may feel even more overwhelming than years prior. With the holidays right around the corner, it is important to start checking lists not once, but twice, and start the holiday season off on the right financial foot.
Plan Before, If You Can
Holiday shopping, if not done right, can cause a huge financial burden. This is why many families begin saving months before Christmas day arrives. This holiday season, consumers plan to spend about $997.73 on all holiday related spending. However, some consumers will spend more, and some will spend less. It is recommended that your budget is decided based on your income and what you can afford, whether that means cutting out the Secret Santa present for your coworker, or giving each child only one big present.
It may come without saying, but if you cut non essentials from your budget, it will be easier to account for holiday expenses. This means the little costs, like ordering food out or going on weekend getaways, should be avoided during this time of year. Also, the sooner you start saving for holiday spending, the less of an impact it will have on your budget. For example, if you start setting money aside in April, your pockets will thank you when December rolls around. You can also spread your purchases throughout the year, by purchasing a gift here and there and storing it in a special spot, to lessen the financial burden.
Shop On Sale And Be Savvy
Markdowns, clearance, and sales will be your best friend when cutting costs during the holidays. Black Friday is one the largest days to take advantage of this, and occurs this year on Friday, November 25th after Thanksgiving. This sale allows you to purchase everything from homegoods, to electronics, to small appliances for a pretty significant discounted rate (depending on the store). Check online before Black Friday rolls around to see which stores have the best deals, and attend the store early before products sell out! Consumers can also take advantage of options such as Klarna and Afterpay, allowing shoppers to make weekly interest-free payments. This may offer a more budget savvy option when shopping online since it allows consumers to pay in installments, instead of paying for the product all up front. Other big sale days to look out for are Small Business Saturday and Cyber Monday for online shopping.
If you only have a specific amount of money dedicated to holiday shopping and plan on shopping in store, pay for your purchases with cash. This gives you a fixed amount to work with, which might make this more easily digestible to budget. Cash purchases also deter you from using a credit card, and research shows that credit card purchases can lead to overspending. In 2021, 7 in 10 Americans overspent on their holiday shopping, increasing their credit card balances, and in turn leading them into debt. Whatever you do, try to avoid using your credit card, because it still remains one of the most expensive ways to borrow due to rising interest rates. And while there are ways to pay down your debt, no one wants to have their debt linger for longer than it should, as this can lead to larger financial issues in the future and pricey interest payments. Using cash makes it easy to keep track of your purchases and stay within your spending range, so make sure to shop smart and create an organized budget before diving into holiday shopping this season.
While gifts and presents are nice gestures, don’t forget to focus on the true meaning of the holidays; spending time with loved ones. There are always ways to enjoy each other’s company that don’t cost an arm and a leg, like through gift exchanges or by making DIY presents. There are always ways to show appreciation to family and friends through small gestures, and sometimes those are the actions that mean the most.