It's tempting to get wrapped up in the commercialism of the holiday season, but without a proper holiday budget, overspending can place a financial strain on individuals and families well into the new year, and beyond.
People are successful when they set a realistic budget for spending. Focusing on non-traditional gifts, the joy of experiences and the resulting memories, can be just as rewarding without damaging your finances, especially as prices on essentials are rising.
To make it a happy holiday budget, consider rethinking your holiday plan, setting a budget and sticking with it.
Here are some concrete steps to avoid excess holiday debt and celebrate the season in a budget-conscious way:
1. Create A Holiday Budget
Write down a holiday budget that includes all planned spending—food, décor, travel, gifts, etc. This can help you see how much income you will need, set spend limits, and relieve uncertainty and financial stress. Had to use your Christmas Club savings earlier this year for an unexpected expense? Take advantage of seasonal work opportunities to help finance holiday spending.
2. Simplify the Season
This year, consider simplifying celebrations and find alternative ways to revel in the season. Resist the urge to splurge on decorating and large parties and choose to gather with family and friends without breaking your budget. As gas and grocery prices are expected to increase, rethink the elaborate (and costly) holiday dinner and invite your loved ones to "meet in the middle" for a more informal get-together. In lieu of hard-to-get items, gift an experience, a family portrait or an online class. Open a 529 savings plan for the kids—the gift that gives long-term.
3. Budget Your Time by Volunteering in Someone's Name
Celebrate those you love by giving back. Volunteer at a friend or loved one's favorite charity or provide a contribution on their behalf. Gift some elbow grease at a local Meals-on-Wheels, community center, humane society, or nonprofit organization that could use your help.
Thanksgiving gatherings could be the time to communicate this year's holiday plan. Such conversations can relieve stress for all involved and avoid undue disappointment. A recent survey shows that small children thrive in environments with fewer toys. Research shows that clutter can impact mental well-being in adults, particular women, and possibly spark increased levels of cortisol, a stress hormone.
5. Shop Smart
There is still time this season to monitor sales for the best deals. Should you use credit this holiday season, look for zero or low-interest payment options. If shopping online, in-store pickup may cut down on shipping costs. Look out for holiday shopping scams and leverage fraud protection via PayPal and credit cards. Use browser extensions (i.e., Honey, Rakuten, or Capital One Shopping) for additional savings. By "abandoning" your online shopping cart for 24-72 hours, the retailer may grant you a discount or perk.
In all, it is possible to make it a happy holiday budget. While gift giving is a long-standing holiday tradition, spending time with family and friends after months of pandemic isolation may be the most meaningful gift of all.
This information brought to you by GreenPath Financial Wellness.