Holiday Spending Tips

The holidays are a wonderful time but for many of us it is also an expensive time. There are family gatherings to attend, meals to make (or contribute to), trips to take, and gifts to buy. We all know that the Holidays are a period that always brings on extra costs yet many of us fall into the same cycle each year of being unprepared for it and face financial struggles along the way. We think that next year we will do better and then as Thanksgiving arrives and we look at our bank accounts we realize that once more we failed to account for the extra spending that is coming our way. 

In past years many of us could work with the extra costs of the holidays, but this year may be a bit different as many of us are already struggling without the extra costs that the holidays always bring. So, it is more important than ever that you are honest with yourself about what you can and cannot afford this holiday season.  More and more of us are relying on credit cards to stay afloat. TransUnion (one of the major credit reporting agencies) just reported that Americans are swiping 19% higher charges more compared to last year. Meaning that we contributed a bit more to the $866 billion balance that was recorded at the end of Q3 (end of Oct)¹. Though credit cards allow us to pay for things we need now but maybe cannot afford, there are also other options beyond continuing to add expenses to your credit cards. Here we will discuss three tips that you can use to begin to rethink Christmas expenses and begin to have the conversation with yourself and others this holiday season. 

Tip #1: Follow Santa’s lead 

 Just like Santa, sit down and look at your Christmas list. When was the last time you made an edit to that list? When was the last time you removed someone from your list? You don’t exactly have to follow Santa’s lead and remove them because someone has been naughty, but instead look at it from a different perspective. Why was person X on your list to begin with? Have things changed since you first added them to your list? Maybe they were on your list to begin with because they got you something first and then you felt bad next year so you added them to your list but never removed them again. Whatever your reason may be, look at your list and stick to a list you’re happy with.

Tip #2: Not everything has to be equal

Now that you have a hopefully trimmed down list let’s talk about budgeting for each person on your list. Just because someone made it on your list doesn’t mean you have to spend X amount of dollars on that gift. This next step is where you sit down and think about how much money you can realistically spend on Christmas gifts this year. 

If you only have $200 (for example) think about who on your list are the most important to you and assign a budgeted amount for that person. Repeat this until you have either planned your total budget (the $200 in this example) OR you ran out of money you can budget. If you ran out of money before you reached the end of your list this is your reminder that you need to be realistic and repeat this exercise again until both your budget and people match (I.e. you don’t have anyone with $0 budgeted next to their name and you only budgeted what you said you wanted to spend). If you can’t make both the budget and the list align, then this is your notice that your budget this year may require a leaner list. It doesn’t mean that this leaner list will be the same list you use next year or the year after, it just means that this year don’t have the budget for a bigger list and that is okay for now.

Tip #3: Let's Talk about it

If you’re having a rough year compared to other years, it is best to be open and honest about it with others who you feel comfortable sharing this with. This year is difficult for many people and though sometimes it feels like we’re the only ones who are going through difficult times we’re often not alone. It may be a difficult conversation to have but not having this conversation may save you from having to pay off gifts for months if you just charge them to your credit cards that will only push off expenses to the future. If you don’t have a budget for Christmas gifts find other ways you can still show others you love them and care about them that don’t involve gifts. If you still want to buy small gifts for some of your loved ones stay tuned for our future blog posts highlighting awesome gifts for every budget.

Sources: 

Holiday shoppers spend more on credit cards as interest rates rise. (November 18,2022). NBC News. https://www.nbcnews.com/business/consumer/holiday-shopping-credit-cards-interest-rates-rcna56457