For Ryan Decker, surviving the holiday shopping season is all about planning ahead. In fact, if he sees a gift for one of his two young sons in March, he’ll go ahead and buy it, instead of rushing through his shopping list in December.
“It eases the burden a lot,” he says, making his December bills more manageable as he spreads vacation costs throughout the year.
Decker, a certified financial planner and director of the Center for Financial Literacy at North Central College in Naperville, Illinois, says that without this kind of advance planning, costs at this time of year can quickly exceed budgets. “Inflation is eating away at our purchasing power, so once you kick off the holiday season, it’s a very stressful time.”
Financial educators like Decker are often busy during the holiday shopping season, sharing tips with their audience on how to avoid debt and save money while staying festive. We asked some of them how they’re personally navigating the season with their finances intact.
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Make a list and stick to it
“I know I’m going to budget so I don’t suffer after the holidays,” says Christine Whelan, clinical professor of consumer science at the University of Wisconsin-Madison. She makes a list of who she needs to buy gifts and assigns a spending limit for each person’s gift.
Part of that strategy is to limit purchases to what she can comfortably afford with her savings instead of turning to credit card debt, Whelan says. “One of the ways we can use our limited resources to maximize our happiness is to pay now, rather than being hit with a credit card bill in February, which compromises our financial and emotional well-being.”
Give (and receive) more creative gifts
Jerry Graham, co-founder of Atlanta-based website KindaFrugal.com, mentioned to his brother that he would prefer a handmade gift this year. “He’s so good at art and woodworking, I told him I’d appreciate a cutting board or something. A homemade gift is more memorable and comes from the heart,” he says. It can also often save money, and Graham knows his brother is on a budget.
Likewise, Felipe Arevalo, community outreach coordinator for the San Diego Financial Literacy Center, collects family photos throughout the year, then, when he sees a promo code pop up, creates a photo calendar for members. of the family. “I got the idea from my wife’s uncle, but no one in my family had done it yet,” he says. Not only does this save money, but it also helps family members stay in touch and see how her sons, aged 4 and 9, are growing.
The DIY strategy also applies to children. Whelan says, “I encourage my kids to give coupons for in-kind gifts rather than stuff. Kids can give a card for walking the dog or other chores, cooking dinner for the family, even if it’s just pasta or babysitting. It teaches children to think about others rather than buying a present. »
Think beyond the holiday season
The holiday season is a great time to make financial plans for the year ahead, says Bruce McClary, spokesperson for the National Foundation for Credit Counseling. “Right now, I’m in the process of setting a draft of financial goals and priorities for 2023,” he says. Focusing on things like travel plans or savings goals helps put vacation spending into perspective. “You can ignore a lot of the advertising and sales-related emails,” he says, and instead focus on what’s most important to you.
One of the biggest obstacles to achieving financial goals is debt, which is easy to rack up over the holidays. In fact, NerdWallet’s 2022 Holiday Shopping Report found that nearly a third of last year’s holiday shoppers who used a credit card to buy gifts (31%) are still paying off the balance. their credit card.
Given the current economic climate and rising interest rates, McClary says, “It’s probably a better idea than ever to avoid relying on loans and lines of credit to get through the holiday season and… be as resourceful as possible about how you spend the money. you have.”
Start saving in January
Graham applies a planning approach similar to Decker’s, but with savings. “We put money aside from January,” he says. He and his wife Sara estimate costs for the holiday season based on expenses from the previous year, then divide by 12 and set aside that amount in a dedicated savings account each month using automated transfers.
“By December, we have enough money to cover holiday expenses, including decorating, food and gifts,” he says. This has been particularly helpful this year as their income has fluctuated due to job changes. Tracking your spending this year will allow you to begin this approach in 2023.
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