Consumers spend more money during the holiday season than any other time of year. According to the National Retail Foundation, the average American spent over $800 in 2015. Holidays are all about festivities and good cheer, but dealing with financial hurdles and shopping stress can get in the way of truly enjoying the season. It’s not just the money required to buy gifts for your family, but friends, coworkers, teachers, not to mention shipping costs, decorations, holiday meals, travel, the list goes on…
Most of us don’t dedicate a savings account or section in our budget for holiday spending. We convince ourselves it’s a one-off occasion where we spend superfluously, then after the New Year we’ll tighten back up.
However, if we simply fly by the seat of our pants when the holidays arrive, it’s possible to land in a deep hole of holiday debt. Planning in advance and carefully budgeting for holiday expenses is the best way to avoid dipping into your emergency fund, or worse yet, charging up the credit cards.
Budget, Budget, Budget
Having a financial plan is the first place to start. Create a spreadsheet with everyone you plan to purchase for and how much you’ll spend. Separate from your gift list, make note of other anticipated holiday expenses such as cooking and baking, shipping fees, home décor, and anything else. This is also a great place to start brainstorming gift ideas and drafting shopping lists.
Ease stress by starting holiday shopping early. Dividing up purchases does less immediate damage to your finances. If you hold off until there’s only a week or so left, you’re at a huge disadvantage. Waiting until the last minute makes you more likely to pick up the first thing you see regardless of cost. Packed parking lots, long lines and frantic crowds can also increase stress levels. By dodging these shopping situations, you do yourself (and your wallet) a favor.
Identify in-store sales, check online promotions and look for free shipping offers. Try to purchase as much as you can online—from the comfort of home. This is far more relaxing than heading to the mall, and allows greater opportunity to price shop. When you need to go to a store, check if they have a smartphone app. If so, there’s likely a coupon section to help you save. Look for store ads and special offers in the newspaper and mail.
Not the best at budgeting, advance shopping or bargain hunting? You can still lighten the load this holiday season with a few tips….
Avoid credit cards, especially store cards which have higher interest rates. The “I’ll pay it off later” mentality is not good for your credit health.
Special talent or knack for arts and crafts? Get creative with gifts. Even if you’re not especially artistic, think about personalized services like babysitting, yard maintenance, tutoring, etc.
Keep receipts. Not only does this help to track spending, it facilitates easier returns. With a receipt you can get price adjustments if you notice a sale after the fact. Include gift receipts–the recipient will thank you!
Ask guests to bring something to share. Dish sharing is an excellent way to cut down on the expense of a huge party, and it allows people to share recipes and family traditions while enjoying one another’s company.
Keep price ranges for holiday gift exchanges to a minimum. Secret Santa and White Elephant are popular at holiday parties—they’re spontaneous and liven up the group, but without parameters participants can feel the need to spend more. Consider talking with family and friends about decreasing the amount spent per person for exchanges. They’ll likely share the same sentiment—it’s a win-win!
Amp up the good cheer and reduce holiday financial stress
If you love to celebrate the holidays, but don’t love the financial aftermath, there are plenty of tips and tricks to help get you through without breaking the bank. Planning ahead for holiday expenses is the best method for considering your wallet and protecting your budget. If you feel like you spent beyond your means last year, think of ways to cut back. Family and friends may appreciate the idea to forego gift exchanges and expensive outings for a casual party at home with a potluck and minimal gifts. After all, the holidays are about spending time with family and friends, not outdoing last year, right?
For your necessary spending, RiverTrace offers members a unique account geared specifically towards saving for the holidays. Our Christmas Club account helps you incrementally put away money throughout the year so that when the holiday season is upon you there is a special reserve of funds tucked away.