09 Dec How to Celebrate the Holiday Without Incurring More Debt
December is the most expensive month of the year, with the average person spending $885 on gifts alone, leading to $720.89 billion in retail sales, according to the National Retail Federation. The pressure of the holidays can lead to overspending and leave you with additional debt to start the New Year and a big feeling of regret in January.
Taking proactive steps, like the following “To-Do Money-Tips”, will help you celebrate the holidays without adding more debt to your life.
Setting a Realistic Budget will set you on the right track early. Separate holiday expenditures from everyday bills so you can keep track of what you spend throughout the season. When establishing a budget, think beyond the gifts you want to buy and include other expenses like decorations, entertainment, food, travel, gifts you want to buy for yourself, and so forth.
Once you have a proposed budget in place, compare it with the money you have left to spend and pare down the budget to match your financial reality. A realistic budget might mean using last year’s decorations, driving to see family instead of flying, or trimming down the gift list.
Establish Spending Limits for each category as well as each gift recipient. Breaking the budget down to a more granular level will serve as a spending guide when deciding what gifts to purchase, food to serve, and decorations to display. You can save money in every category based on your financial abilities and your priorities. For example, you can trim the food budget by entertaining at home or participating in a potluck rather than catering a meal or meeting at an upscale restaurant.
Save money on giving this season by limiting the number of people you buy gifts for and set a budget for each person on the list. Keep track of gift purchases to avoid buying extra presents because you found a “good deal” or noticed something was on sale.
Get Creative with Gifts. Presents tend to take up the bulk of the holiday budget. Save money by creating homemade gifts for family and friends, buying store-bought presents with discounted gift cards, and looking for discounts on websites like RetailMeNot.
Use a Spending Tracker to stay on budget. Free apps like Pocket Guard focus on spending without a lot of other bells and whistles, making it fast to learn and easy to use. It will show real-time figures, including how much money you have left, based on the budget you built.
Don’t Procrastinate. As a general rule, merchandise gets more expensive the closer to the holiday you get. Sales during the December holiday season can lower costs significantly if you plan out your gift giving and holiday purchases and plan any travel around discount fare sales. Last-minute shopping means you must pick through what’s left without the benefit of promotions and discounts.
In 2018, CNBC reported that the average American racked up $1,054 in holiday debt, making it the norm. However, enjoying the holiday season without incurring new debt will leave you in a better financial position to start the New Year. It takes planning and careful tracking to prevent a debt hangover in January, but it is well worth the effort to plan early for your financial success in the new year.
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