The holiday season is in full swing, and while we all love giving gifts to our loved ones, the stresses of holiday shopping and spending can put a damper on this most wonderful time of year. With travel, gifts, decorations, food, charitable donations and other expenses, holiday spending can add up quickly. With that in mind, here are some tips to help you rein in your holiday spending and get the most out of the season.
Set a budget and stick to it
First and foremost, it is important to know how much you are willing and able to spend during the holidays. Given the fact that we are in the midst of a global pandemic, holiday travel, parties and get-togethers are likely off the table for many this year. And while most of us would undoubtedly rather spend time with our loved ones this time of year, the resulting savings from skipping on these activities should be considered when budgeting for the holidays. When building your holiday budget, making a list of holiday expenses is a good place to start. Evaluate how these additional expenditures will impact your everyday budget and prioritize your spending. Once you decide on how much you are able to spend on a particular activity or item, stick with that amount and don’t go over budget. Don’t forget to keep track of your spending as you go, so you know if you are keeping to your budget.
Make a list, check it twice
Giving gifts feels good, and it is a great way to show appreciation to your friends and family, but it will get expensive if you try to buy a gift for everyone. Instead, consider other ways to spread holiday cheer. Make a list of the people it is most important for you to give a gift to. For everyone else, you can explore other options like sending holiday cards, baking cookies for them (if you are culinarily inclined) or even just calling them or sending a heartfelt text.
Be honest with yourself about what you can afford
We are all at different places in our lives and that includes our financial situations. While you might be tempted to overspend on someone who always gets you an expensive gift, don’t put yourself in debt or in a financial bind trying to reciprocate their generosity. If you can match their gift with your own gift and you are so inclined, go for it. But it is important to be honest with yourself about what your current financial situation will allow and what you can and can’t afford to spend.
We can all get wrapped up in the holiday season, and this can be especially true when shopping for children and grandchildren. With so many families struggling financially this year due to the pandemic, it is perfectly reasonable to scale back on gifts. Setting expectations ahead of time can help ease the stress of having to cut back on gift giving.
Look for deals
This time of year, there are shopping deals and discounts abound. And with the continued growth in popularity and ease of online shopping, comparing prices and searching for deals has never been easier. If you are shopping online, look to take advantage of online coupon codes that are offered on many popular store websites and offer discounts on products. When shopping online, don’t forget about shipping costs. Many online vendors offer free shipping, and taking advantage of this perk can add up to significant savings. If you are shopping in person, look for coupons in-store, comb through the coupons you receive in the mail, and see if you can utilize online coupons and coupon codes in the store. It is not uncommon to see stores offering 50% off or more on items during the holiday season. Take advantage of these sales, but don’t let them take advantage of you. Don’t go over budget or purchase items not on your list, even if you are getting a good deal.
Plan ahead to avoid going into debt
This is good advice year-round and not just during the holidays. By planning, budgeting and saving ahead of time for additional holiday expenses, you can put yourself in a better financial position come the end of the year. This can also help you avoid racking up credit card debt, which usually comes with high interest rates. Average annual percentage rates on credit cards generally range from 15% to 20% or higher. A great way to avoid holiday spending stress is to not go into the new year paying off holiday debt.
It’s not all about the gifts
It’s easy to get caught up in the gift-giving spirit, but what makes the holiday season special for so many people isn’t the stuff we give and receive. It is about connecting with and celebrating the ones we love. Whether or not you are trying to cut costs this year, remember the people closest to you are what is most important.
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Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.