Holidays are coming. As the cost of living increases, for many people, the holiday season brings not only joy but also headaches from trying to make ends meet. Don’t let multi-digit price tags scare your holiday spirit away. Here are some tips and tricks to help your budget survive holiday expenses.
A late October survey from U.S. News & World Report showed that more than half of the respondents are currently living paycheck to paycheck. With this in mind, about 70% of those people balancing on the verge of the debt pit are worried about affording the holidays this year. It is no wonder since almost 18% of those surveyed are still paying off credit card debt from last year’s holiday season.
This year, inflation has increased consumer prices by an average of 6% in the Organisation for Economic Co-Operation and Development (OECD) countries. In many destinations, the prices for food and energy rose about 10% in 2023, limiting the consumer potential for non-essential spending, which includes holiday shopping.
As prices remain high, many Americans plan to cut back either their holiday expenses (21.4%) or other expenses to afford holiday spending (30.5%). Another 19.7% admit they’ll use their credit cards and 13.1% will use buy now pay later (BNPL) schemes to cope with the seasonal cost.
We have prepared some helpful strategies to manage your holiday expenses wisely and keep on top of your finances amid the festive season.
Make a List
However obvious it may sound, planning holiday expenses is the first step to healthy spending. Making impulse purchases might feel good in a moment, but it will eventually wreck your budget and savings goals. Therefore, don’t start holiday shopping without a list.
You can use a paper planner or a gift planner app like Santa’s Bag or Giftster. App tools offer more convenience since you can add a gift link, track the price, and even proceed to make in-app purchases. Moreover, gift planning apps often allow you to share a wish list or gift list with friends and family so that it’s easier to coordinate.
When you make a holiday expenses list, it’s easy to focus mostly on gifts, as they take the most time to plan. However, buying holiday decorations, party decor, groceries for a festive dinner, and even gift wrapping also takes up a fair share of the household budget. Don’t forget to plan these expenses early too.
Once you have prepared your holiday lists for every category of expenses, try to estimate the approximate amount of money you’ll need to cover what’s planned. Make sure to compare it with the available savings or monthly budget. Perhaps, you’ll need to cross out some items on your list or look for more affordable alternatives.
The next task may be the hardest. Stick to your list! It may be challenging to do when you wander around the store shelves filled with all the beautiful festive items and lucrative discounts. Perhaps, you’d better make your purchases online to avoid marketing traps in a physical store.
And yet, online shopping also has some pitfalls. Once you start browsing for an item, you’ll get thousands of targeted ads. Don’t forget to make your holiday shopping intentional, not impulsive.
Look for Deals and Discounts
It’s no secret that most shops take part in the Black Friday and Cyber Monday events, lowering their prices on selected goods significantly. While in the US, the peak of sale deals falls on the Friday that comes after Thanksgiving, other countries may have different dates for the most anticipated shopping event of the year. For instance, in China and other Asian countries, the best discounts may be found on the so-called Singles Day (11.11) – Nov. 11.
At many e-commerce marketplaces, brand shopping platforms, and Instagram stores, the period of extreme discounts lasts for a week or two. Besides, some good pre-Christmas deals may also be available in December.
When we speak of deals and discounts, let’s not forget about coupons. There are numerous coupon-finding and price-tracking apps, browser extensions and websites like Honey, Slickdeals, Capital One Shopping, RetailMeNot, Ibotta, and Rakuten.
Instead of browsing through a myriad of shopping offers, use the tool that finds and applies the coupon automatically for you. It’s a great way to save not only money but also time. Besides, apps of this kind often offer cashback rewards for shopping at partner retailers. That’s another smart way to get more for paying less.
Use Credit Options Wisely
Let’s be frank, many people won’t make it through the holiday season without going into the red. Using your credit line is not bad as long as you do it responsibly. If not, you risk starting a debt pile that will only keep growing.
The most advantageous way of using credit options is when you do it without paying an extra percentage to the bank or lender. Most credit cards have a certain period when you can freely use credit costs without any additional fees. Moreover, many 0% APR credit cards have an introductory interest-free period which may last longer than a year. Some examples are Wells Fargo Active Cash Card or Chase Freedom Unlimited. Check the availability of similar options at your financial institution of choice.
At the same time, some credit cards not only have low interest rates but also offer rewards for your daily purchases. Consider holiday shopping at the bank’s partner stores. That would maximize your rewards and bring many good bargains.
Think twice before using a credit card, in case you’re not sure you’ll be able to pay the debt back in time. Estimate the APR that will be added to your balance each month. Will you be able to handle it?
One of the best fintech solutions to help you get through this holiday season is the ability to buy now and pay later. Point of sale BNPL loans from fintech companies like AfterPay, Affirm or Klarna typically incur no interest if paid on time. Besides, BNPL approval happens instantly on the spot and requires no hard credit checks.
Nevertheless, the downside of quick and cheap loans is the illusion of expanded spending capability. Often easy-to-get loans are used irresponsibly by people unable to keep up with their payment schedule, naturally facing additional interest payments. Do not overestimate your financial capabilities. The high available credit limit doesn’t equal the same sum on your debit account. If you have a hard time sticking to your budget, it’s better to use prepaid cards.
Less Money and More Creativity
They say people in need are often more creative since they have to figure out how to deal without certain privileges. If your financial situation is bad enough on a regular basis, don’t aggravate it with a shopping extravaganza.
There are a few ways of saving money while still having a good time during the holiday season. Presents and decorations don’t always have to be costly or even ready-made. You can DIY some of the presents, greeting cards, gift wrappings, Christmas ornaments, wreaths, etc.
If you’re going through very financially tight times, it doesn’t mean you can’t give your loved ones a token of affection. People often give each other “experiences” like a massage, date night, homemade romantic dinner, a day without chores for a homemaker, a short trip to a new place, and other fun activities. Things like that involve a minimum if any money, but you are giving some quality time instead which is often more valuable than physical gifts.
As for the festive celebrations, you can get together with friends and family and have a potluck dinner to save some money on food. Look for new recipes and cook on your own instead of buying ready-made dishes.
You may be also interested in other Christmas spending tips & tricks.
Save Money on Holiday Travel
If you can’t afford holiday travel at all, try new low-cost or free experiences with your loved ones. Organize a sports game, visit a free outdoor event nearby, check the websites for free attendance days in galleries or museums, get together to play board games or a quest. If you have little imagination, generative AI chatbots like ChatGPT can suggest some party activities, draft quest scenarios, tell you about interesting active games, and more.
If you do want to go someplace new during the holiday season, there are ways to do it on a low budget:
- Redeem your miles or reward points for flights and hotel stays. Unlock additional benefits like a fifth night free when paying with miles or points.
- Be flexible with your travel dates and avoid the most popular peak travel times. Be ready to pack quickly as last-minute tickets may go with discounts.
- Use accommodation-sharing platforms or couchsurfing apps.
- Join travel-related communities on social media to find out about group trips and exclusive offers.
- If you go abroad, use credit cards that waive foreign transaction fees and bank accounts that reimburse ATM fees.
- Check Groupon, LivingSocial and other daily deal websites to find discounts on local eateries, events and vacation packages.
- Look for establishments that offer student, senior and AAA discounts, if you belong to any of these categories.
- Coordinate your trip with friends and family, to split gas and other expenses when you travel by car.
- Consider camping experiences if the weather allows that.
- Explore natural sights and beautiful locations nearby on short weekend trips instead of going to a full-scale resort.
