Ready or not, the holidays are right around the corner. Halloween candy is out for display, and Thanksgiving tablescapes adorn magazine covers. It’s that time of year. With school underway and chillier mornings here to stay, let’s chat about the importance of a holiday savings plan. Whether you’re planning to spend the holidays at home or elsewhere, it’s important to evaluate upcoming expenses. Saving money is key. From gifts and holiday decor, to cookie exchanges and ugly sweater parties, the average American pays for quite a few expenses during Thanksgiving, Christmas, Hanukkah, and Kwanzaa. Ultimately, it’s important to remember that nurturing your financial health is just as important as your mental and physical wellbeing. If you think it’s too late to start a holiday savings plan, I promise it isn’t! Read on for tips and tricks to feel less stressed about gift giving in the coming months.
The Average Cost Of The American Holiday season
The holiday season in America seems to be getting more and more extravagant and expensive—with or without standard travel. Since 2009, American consumer spending on holiday gifts and expenses has steadily increased. While fewer people are shopping in stores, e-commerce has captured an increasing percentage of holiday spending. Although the pandemic has resulted in a decrease in spending on travel, the average American spent $998 on gifts, holiday items, etc. in 2020—according to Investopedia. To put this into perspective, in 2010, Americans planned to spend an average of $831 on the winter holidays.
Save Money Now, Avoid Debt Later
Regardless of your current debt situation (be it student loans, health bills, the rise of inflation, etc.), adding more debt during the holidays isn’t the goal. However, if you start saving now, you’ll be ready for gift purchases in November and December. Interestingly, only 42% of holiday shoppers claim they can pay their debt down in three months or less. What does this mean? That many shoppers will require months (or maybe even years) to pay down the debt they earned in a month’s worth of shopping. And with that, let’s chat about ways to avoid holiday shopping debt before it sneaks up on you.
5 steps To Create A Holiday Savings Plan
To begin, think about holiday spending the same way you would budget for other recurring, non-monthly expenses, like home maintenance. Be ready for the expenses in advance, and have money set aside via setting financial boundaries. In essence, you’ll want to funnel a small portion of each paycheck into a separate savings account to cover these upcoming expenses.
Define your holiday spending cap. To do this, think about how much money, realistically, you can save from each paycheck until December. That might look like $50/paycheck. If you have two paychecks in October and November, you’re already looking at $200.
Create a list of everyone who you plan to gift. Be sure to include a miscellaneous group if you get asked to join a Secret Santa list, for example.
Cut back on superfluous spending. Meaning, opt for one less take-out meal during the week. This will help you set aside additional funds during the holidays. To make this slightly easier, unsubscribe to marketing emails from brands and products that may tempt you to buy stuff you don’t necessarily need right now. Additionally, when you leave the house to go for a walk, grocery shop at the farmers market, etc., only bring cash with you. Not having your credit card will inevitably curb additional spending.
Pay close attention to Black Friday and Cyber Monday deals. Score great gifts at a fraction of the original cost by paying attention to sales while using coupons. Speaking of gifts, you can easily save money by making homemade, DIY gifts, like a face scrub, candles, and chai mix.
Make extra cash by selling or donating clothes and other gently used items. An easy way to make more money this time of year is to consign your clothes (locally or on an app, like Poshmark) and sell unused items on Facebook marketplace. Whether you’re dropping off slightly used shoes, jeans, sweaters, etc. at your local consignment store—or decide to sell things in storage—these activities not only add more cash in your pocket, but they’re also a win for the environment.
Make a plan to stay accountable
Rather than stress about gifting your loved ones, take these steps to ensure a financially sound holiday season. All it takes is a bit of planning and staying accountable! After all, saving now will help you avoid common holiday budgeting obstacles: a last-minute invite to a white elephant gift exchange, a pricey plane ticket to visit your parents, or a generous bonus for your favorite barista.
All images are courtesy of Unsplash.