Conversations continue about rising prices and potential product shortages during the holidays, which might put a dent in your holiday budget.
Affirm research shows that 48% of 2,000 surveyed consumers intend to spend more money on the 2021 holidays due to COVID-19’s impact on 2020 celebrations. Seven in 10 respondents said they typically go over budget during the holidays.
Data shows that U.S. consumers are now facing the “Everything Shortage,” which leads to higher prices for food, fuel, furniture, cars and holiday gifts. Pair this with many consumers’ psychological need to ‘make the holiday special,’ buyers could be facing a financial minefield.
It’s tempting to get wrapped up in the commercialism of the season, but 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. Shared here are concrete steps from our partners at GreenPath Financial Wellness 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’ll need, set spend limits, and relieve uncertainty and financial stress. Had to use your Christmas Club savings earlier in the 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. Volunteer 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.
4. Set Expectations
Family gatherings or conversations early in the season could be the time to communicate this year’s holiday plan. Such conversations can relieve stress for all involved and avoid undue disappointment. .
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 (like Honey) 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.
