The holidays tend to be a fun and joyful time but we can’t ignore the flip side of those holiday parties and gift exchanges—the stress of additional expenses. End of year tends to be the time people are most generous, whether it means using bonuses from work or savings to bless others, but that makes November and December the two most expensive months of the year. In fact, according to a survey by Lending Tree, consumers accumulated $1,549 in debt on average during the holidays in 2022.
But for most people, $1500 is an enormous financial burden. For the average family, those holiday expenses are put on credit cards with moderate to high interest rates, creating new debt going into the new year. Today we’ll unpack the 7 top ways you can avoid going into debt during the holidays and sticking more closely to your financial goals, even during the season of generosity.
- Create A Holiday Budget
It’s difficult to stay on track financially if you’re not sure what “on track” means for you so we recommend creating a budget specifically for all holiday spending. Unlike your everyday budget, a holiday budget is unique because it’s temporary and limited to certain purchases. Your budget should list all expenses, the cost associated with each one, as well as the money available to devote to holiday spending.
Include all holiday-related spending to this budget such as decorations, food for gatherings, weather-specific clothes, and gifts for family, friends, and coworkers. Think critically about how much money you can reasonably devote in total holiday spending and then attach a number to all of those line items. If you had a $500 total budget, you may realize you don’t have room in the budget for decorations and you’ll have to reuse last-year’s decor or you won’t be able to throw as big a Christmas dinner as you have in the past. Knowing how much money you can devote to each gift is helpful as well—that’s where the costs really stack up. Try devoting a set amount such as $40 to everyone’s gift and build in a buffer of $50 - $100 into the budget in case you accidentally go over. Overall, having a budget will guide your purchases and help you avoid overspending during the holiday rush.
- Start Saving Early
Now that you have a budget, start saving! Even if you only have a few months to save, any little you can set aside before the holidays will ease the overall financial burden. Look at your everyday budget and decide on what expenses you can abstain from or avoid completely throughout the year and set aside those funds—even if you can only save $25/month, that’s $300 at the end of the year if you start saving in January. You may even find lines in your everyday budget you can remove altogether to help you build more overall margin in your budget.
- Consider Homemade Gifts
If you don’t have a lot of time to save, avoid going into emergency savings or debt for holiday purchases. Homemade gifts can help accommodate a smaller holiday budget, and you don’t have to be crafty to put together an excellent gift. In fact, this is a moment when the thought behind the gift is really what matters, not the price tag. When thinking of a gift for someone, ask yourself:
- Have they had any milestones this year, like a graduation, wedding, new job, house, baby?
- Do they have a favorite food?
- Have they voiced a need or want this year?
- Do they have a favorite memory I can memorialize?
- What are their favorite things, people, music, stores, or colors?
Chances are, there are a few things that come to mind for each person that can be tied to a homemade gift. Think about baked goods or special meals you can make for someone. You can also gather photos from a recent milestone and put together a photo album signed by friends or family members. You can also gift homemade art, coasters, candles, hand-stitched sweaters, planters, or even a propagated plant you grew special for someone. A common option is also to offer your time or skill as a gift—if you’re good at marketing, offer someone 10 hours of your time to help them market their new business; or offer to babysit for someone who lives far away; or gift an afternoon of your time to organize a cousin’s garage.
- Thrift, Thrift, Thrift!
If the thought of homemade gifts feels intimidating, we recommend going thrifting. Local thrift stores can really save your holiday budget because they often create holiday sections toward the end of year, where you can buy high-quality and gently used decor, serving dishes, and gifts. This is a labor of love, however; it may take a few separate trips and multiple stores before you find exactly what you’re looking for, so be patient. To help with your thrifting experience, go with a list; think through the types of gifts and items you’d like to find and keep an open mind for other items that stand out to you. You might be on the hunt for a bag for your aunt, but find a designer sweater on the racks that she’d love. Grab a friend if you need some company and get creative!
- Capitalize On Holiday Deals
Each year, companies across your city have seasonal deals that can make holiday shopping much less financially stressful. Subscribe to email newsletters and download the apps for your favorite stores and look out for reward programs; it’s likely that with a combination of Black Friday, small business Saturday, and Cyber Monday deals, along with loyalty rewards, you can get highly-coveted items cheaply.
- Facebook Marketplace
Facebook Marketplace is often a treasure trove of gently-used items; this can be an incredible source of decorations, serving dishes, gifts and more. We suggest creating alerts for the kinds of items you’re looking for so you’d get alerts when those kinds of items become available and widen your geographic search to include neighboring neighborhoods. Sometimes the right pair of headphones you’re looking for is available one town over and worth the drive and the price. Be sure to use caution and keep your personal information safe when using Facebook marketplace to avoid scammers.
- Research Before You Buy
Finally, we suggest doing plenty of research before buying something brand new. Often, retailers price match items if you show that a competing store has a better price so be prepared to price check items while shopping. You may also see that another store offers the same items at a steep enough discount that you’d prefer to shop with them. While you may have loyalties to specific stores, your research may help you find more reasonably-priced alternatives or prices for items you’re on the hunt for. Don’t forget, part of shopping research means checking the clearance section of stores before choosing to buy full-priced items. You’d be surprised to find that alternatives to items on your list are available in clear sections because they were gently damaged in transit or returned—just ensure your items are without stain or noticeable blemish before you buy it!
- Bonus: Joint Gifts
A common cost-saving measure, especially among family members is to pool money to go in on a nice gift for someone else. If you have siblings or cousins, consider asking them to contribute to a gift they’re purchasing for someone else in the family. This is an easy way to gift something nice to someone else without footing the full cost of the item.
Happy hunting this holiday season and we hope you have a debt free new year!
