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How To Avoid Holiday Financial Stress

By: Kenyon Sutton, Financial Wellness Manager

Posted on 12/17/2021 9:00:00 AM

Young mother reading a Christmas story with her daughter by the fireplace

The holidays are a wonderful time of year, full of seasonal cheer, giving, and fellowship. But they can also be financially frustrating, so it's no surprise that many people tend to struggle with stress and anxiety around the holidays.

With all of these great holiday sales popping up at your favorite stores, how can you keep yourself from overspending? Let's review how you can splurge on holiday décor, festivities, and gifts for your loved ones without compromising your financial health in 2022.

1. Create a Holiday Spending Plan

The idea here is to be realistic about how much you can spend and what you want to spend it on. In other words, set up a budget. Make a list of your expected holiday expenses, making sure to account for additional incidentals like holiday food, gifts, travel expenses, and charitable donations, which are often overlooked when budgeting this time of year. Decide on a total amount you are willing to spend this year and then split this total into categories.

When budgeting for gifts, it’s helpful to list all the people you plan to shop for, what you’d like to buy and what you expect to spend. This way, you'll get a clear idea of the numbers involved. Remember to leave room in your budget for unplanned expenses, like last-minute gifts for your office’s gift exchange.

Don’t forget to keep track of all your purchases and spending. Expenses tend to add up fast during the holiday season. Consistently monitoring your totals could provide the reality check you’ll need to keep your spending on track and prevent you from going over budget. Also, creating a holiday spending plan can help you curb impulse purchases and spending.

2. Prioritize your Bills

With so many expenses around the holidays, it’s entirely possible to forget about some of your regular monthly bills. If you miss payments now, you will have to make up for them in the future, which usually means paying additional fees or penalties. Not to mention, missing or skipping a payment is one of the worst things you can do for your financial health. Your payment history is the number 1 determining factor when it comes to calculating your credit score. Missed payments show that you are not reliable when it comes to paying back your debts.

3. Stick to a Cash-Only System

It’s easy to overspend when you’re using credit cards because you aren’t seeing the money you are using. It’s more painful for some people to physically hand over cash than it is to swipe a card. A cash-only budgeting system will motivate you to stick to your budget because you will be able to see when you start running out of money.

Plus, it’s just good business. Considering interest rates, if you don’t end up paying the card off completely at the end of the month, you’ll likely pay more for the gifts when using credit cards.

Man using an iPad to buy his holiday gifts online

4. Shop Smart

Shopping sales like Black Friday and Cyber Monday are a great way to help you save a pretty penny. But, if you can get ahead of your holiday shopping by buying presents that you know people will want, earlier in the year when they are on sale, this may help you save money and reduce your December spending.

It might also be a good idea to do most of your shopping online. For one, it's easier to comparison-shop to ensure that you get the best price possible. Try apps like Honey which will search for coupon codes during checkout, show you the historical price information, and if a product is cheaper somewhere else to help you get a bargain! Also, many online stores give discounted or free shipping to shoppers during the holiday season.

5. Don’t Buy It if You Can’t Afford It

The old saying, “If you can’t buy it twice, you can’t afford it” may not apply to everything in life, but this aphorism offers some great advice during the frenzied holiday season. If you find yourself dipping into your emergency fund or taking out a payday loan to offset some of your holiday expenses, it’s time to step back and review your spending habits.

You don’t have to get the most expensive gifts to show someone you appreciate them. Sometimes the best gifts come from the heart. So, get creative with your gift-giving, if you are crafty, make them something unique and personalized, even a framed photo of a favorite memory together or special occasion can show how much you care. There’s no reason to shortchange yourself, your savings, or put yourself in debt. You can make the holidays magical even on a budget.

Remember what the holiday season is all about. It’s very easy to get caught up in all the consumerism and flashy sales that characterize the holidays. Focus on what is truly important, like spending time with your friends and family and having a good time, because that is the best gift of all.

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