For most, the holidays are a time of family, food and shopping. It’s the season of giving, which also means it’s a season of spending.
According to the 2018 Bankrate Holiday Gifting Survey, more than two in five shoppers feel pressured to purchase a gift that costs more than what they’re comfortable spending. So, while finding your family and friends the perfect gift is ideal, be mindful to not let it take a toll on your savings and financial goals going into a new year.
The National Retail Federation reported that the average consumer is expected to spend $1,007.24 this holiday season. Considering more than half of consumers in a recent GOBankingRates survey reported having less than $1,000 in their savings account, that number could turn festive spirits sour when January credit card bills arrive.
While the holiday season is already underway, it is still possible to end the year without taking on additional debt by creating a practical budget, staying organized, keeping track of costs, getting creative with gift-giving and planning for next year early. Here are a few tips to help keep yourself on the financial nice list:
· Establish a holiday budget. Your budget should be based on your current income and what you can feasibly spend without taking away from other expenses, such as bills and necessities. Stick to this budget, no matter what, and leave yourself a little room for extra expenses, such as last-minute gifts, travel costs, lodging, food for family gatherings, entertainment and décor.
· Get organized. With Black Friday and Cyber Monday behind us, you may have gotten some expenses out of the way. Total what you’ve spent for gifts, décor and travel, and what you still anticipate you’ll spend in the name of holiday merriment. Establish a gift and expenses list. This should include everyone that you plan on purchasing a gift for, as well as an allocated amount for each.
· Get creative with gifts. Opt for a new tradition, draw names and buy a gift for one person instead of buying for everyone. Consider a unique and personalized present, such as a homemade gift, baked goods, second-hand treasure or even the gift of time spent together. You could also give the gift of an experience or share your education to teach someone you love a new skill.
· Share the gift of financial education. The 2018 Bankrate Holiday Gifting Survey revealed that more than half of parents feel pressure to overspend during the holidays. Start your child or teen a savings account to help him/her earn money for spending and gifts, while also teaching them the importance of budgeting. Cash is a fast and easy gift, but an initial deposit into a savings or debit account — coupled with a trip to the credit union to learn about banking — is truly a gift that keeps giving.
· Plan for next year. It’s never too early to get a head start on saving! Many financial institutions offer a holiday savings or Christmas Club program that helps you automatically save for next year’s holiday season. Evaluate how your spending goes this holiday season and use it as a general rule for how you can improve your budget for next year.
· Find additional funds. Until your holiday savings or Christmas Club accounts are started for next year, here are a few ways to free up additional funds. To avoid swiping your credit card, try getting creative with gifts (such the ideas above). Also, don’t be afraid to let your family and friends know that you’re on a budget. They may even be relieved to know that they can reduce their spending, too. If you have a loan payment, utilize a non-debt resource, such as a skip-a-payment option through your financial institution. If you get a holiday loan, always pay it back within 12 months.
