The holidays may be “the most wonderful time of the year,” but they often come with a steep cost.
That’s especially true after a 2020 holiday season that saw consumers spend nearly $790 billion over November and December. During that time, the average shopper spent $998 on gifts, decorations, and other holiday-specific purchases.
If the holidays evoke a sense of financial dread, you’re not alone. And if you’re looking for some great tips to control your seasonal spending, then you came to the right place.
Here are four great ways to save money during the holiday season:
1. Establish Spending Limits
You’re going to spend money this holiday season, and that’s okay! The question is, how much do you intend to spend?
The real danger of the holiday season comes primarily from spontaneous purchases.
It’s a common phenomenon. In fact, peer pressure drives 40% of millennials to overspend and avoid the ever-present enemy of our time: the fear-of-missing-out (FOMO).
The only way to combat the financial drumbeat of your friends, family, and social media accounts is to build a realistic budget that incorporates all of the major holiday spending categories, including:
- Gift purchases (including cards, wrapping paper, and shipping costs)
- Travel costs (including flights, rental cars, ride shares, and gas)
- Food (including restaurants, specialty orders, and alcohol)
- Charitable donations (if applicable)
While these categories cover core holiday spending, be sure to build in extra money for incidentals: the purchases you make while making other purchases.
As you well know, grabbing lunch or coffee-to-go during the holiday season can quickly add up.
2. Go Cash-Only
Our post-pandemic world is more digital than ever, and practically everything happens online.
In fact, Americans spent a record $188 billion in online shopping last holiday season. Who can blame them? It’s convenient and keeps people from having to venture out into the wintry cold.
Unfortunately, online shopping also encourages consumers to load up their credit cards at dangerous rates. Recent studies found that in 2019, nearly 48 million Americans were still paying off the credit card debt from the 2018 holiday season.
That’s why we recommend switching to a cash-only budget during the holiday season.
The rationale is simple: if you’re physically holding a limited amount of money, you’ll be less likely to spend it. After all, a credit card simply requires a quick swipe or tap, while cash requires you to actually count the correct amount then hand it to the clerk.
It’s no wonder, then, that credit cards drive consumers to spend 113% percent more than they ever would with cash.
While cash-only budgeting won’t work for every area of your spending, you can certainly implement it for your in-person gift purchases and grocery shopping.
3. Start Early & Seek Out Sales
Generally speaking, it’s best to start your holiday shopping as early as possible.
Last year, many retailers started reducing prices well before Thanksgiving, so if you have specific items you’re looking to purchase, keep an eye out for them as early as possible.
This is also a smart practice during a year that has seen record shipping shortages, as the pandemic severely disrupted the international supply chain. In fact, many companies are reporting that many toys have already sold out and countless apparel companies are understocked.
But don’t worry if you haven’t already started your holiday shopping. There are two multiple major sales coming up:
- Black Friday: The day after Thanksgiving (November 26th) is Black Friday, one of the best opportunities to secure big-ticket items at reduced prices. In 2019, shoppers spent about one-third of their total holiday budget on Black Friday sales.
- Cyber Monday: If you didn’t get what you wanted on Black Friday (or if you want to avoid big crowds), you’ll have another chance just three days later during Cyber Monday (November 29th). Keep looking for the best available deals and offers, as they’ll often be advertised well ahead of Cyber Monday itself.
4. Choose Personalization
Giving is an art. It requires a level of intimacy and understanding to provide something truly memorable.
That being said, gifts aren’t made “great” by their price tag alone. Instead, the most moving gifts often have more heart than financial heft.
If you have a particular skill or craft, whether it’s letter-writing, knitting, woodworking, baking, or painting, consider turning your art form into a genuine gift.
You’ll not only be giving your friends or family something tangible. More importantly, you’ll be giving them the gift of your time, along with the piece of your heart that you poured into its creation.
After all, anyone can press “click” to purchase an item. But only you can create with your uniquely “DIY” skillset.
The holidays are meant to be enjoyed. Make sure you follow these four tips to protect your budget while getting the most out of the season.
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