The holidays. A time defined by the excitement of finding the perfect gift, the sounds of commerce ringing through local retailers, and, for many Americans, the looming dread of post-holiday debt.
Each year, Americans spend more than $1 trillion on holiday-related expenses. Moreover, a recent survey indicated that nearly 60% of holiday shoppers are putting holiday expenses on credit cards, taking on an average of $1,300 in debt. Between gifts and goodies and greeting cards, those holiday expenses add up fast and can adversely affect your finances in the New Year.
So how do you get through the holidays without taking on massive amounts of debt?
Set a Budget
Every smart saving plan starts with this vital step. In terms of holiday spending, your budget should take into account more than just the cost of gifts. Postage, greeting cards, gift wrap, shipping, travel, giant inflatable lawn decorations, you name it – they should all be included in your budget before you go full Clark Griswold.
Make a List
Jolly Ol’ Saint Nick shouldn’t be the only one beholden to a list. Weed out the naughty and the nice with a list of who you want to shop for and set a dollar amount of what you want to spend for each person. Notice I said “dollar amount” and not item? Sometimes the quest for the perfect gift doesn’t lead to the best financial outcomes, so stick to an amount and work your gift giving magic around it.
Don’t even act like you’re above the occasional impulse buy; I know I’m not. When you’re looking for gifts for your loved ones and happen across something that you can’t live without, have some money set aside to treat yourself without wrecking your budget.
Even though the holidays happen at the same time each year, they still manage to catch some people off guard. Save yourself some stress and money by shopping early. Not only will this allow you to spread out expenses over a few months, it will also help you get the most out of sales and can save you a bunch on shipping costs.
Oftentimes, the most well-received gifts aren’t necessarily the most expensive. Whether making something from scratch or finding something special at an antique store, thoughtful gifts can also be budget-savers. Have some photos printed and put them in a nice frame. Find a piece of vintage jewelry you think your friend or family member will like. Or, if you’ve got the time and talent, knit a scarf. The Internet is full of ideas for personalized and budget-friendly ideas.
Have a Plan
You’ve made your list, checked it twice, and still think you’ll have to put a portion of your holiday spending on credit. That’s perfectly fine as long as you have a plan to pay it off without relying on minimum payments. If you’re determined to have a debt-free holiday season, make all of your purchases in cash. That way you won’t be tempted to go over budget or splurge on impulse buys.
Start Saving for Next Year
The holiday season is a time for giving, appreciation and love – not putting your financial wellbeing to the test. As soon as the holidays are over (and any incurred debts are paid off), start saving up for next year. Even setting aside $10 each week will leave you with a tidy sum and help you get through the next giving season without giving yourself a debt-induced stress headache.