Home & Family Finance
Avoid the Red and Save the Green this Holiday Season
/ November 9th, 2020
The Christmas holiday season is a favorite time of year for many people. It’s also one of the most expensive seasons. On average, Americans spend about $1,500 per year – about $500 on gifts and nearly $1,000 on entertaining, traveling, and special outfits. The 2020 Holiday season celebrations will undoubtedly be much different than past celebrations. The COVID-19 pandemic will keep most of us at home, reducing travel to the homes of loved ones in other parts of the country. In addition, since the pandemic has impacted the economy, many Americans have lost their jobs and money is tight for many households.
However, this doesn’t mean you must cancel your Christmas, Hanukkah, or Kwanzaa celebrations. To keep your holiday spending under control, follow these recommendations:
- Crunch the numbers. Create a holiday budget listing all expenses, including small gifts to teachers, babysitters, and others. Be sure to include extras, such as cards, wrapping paper, decorations, and holiday clothing purchases. Set a spending limit for each person and item on your list.
- Avoid money matching. During this difficult economic period, remember that the holidays are about more than just giving and receiving. Most people feel the stress of the dollar-for-dollar matching competition, so talk with the people on your shopping list about setting limits. If gift piles look skimpy, fill in gaps with homemade presents or offer help to the recipient in the way of babysitting, yard work, or home-cooked meals.
- Start early. Avoid the last-minute rush so you'll have more time to comparison shop. If you're in a rush to get out of a crowded mall or store, you're more likely to spend impulsively as a way of escape.
- Get creative. Set up a gift exchange among friends and family. For children with big-ticket items, consider pooling resources with other family members rather than splurging yourself into debt.
- Be a quitter. When you hit your budget limit, stop! If you need hard-core support to keep yourself in check, leave credit cards at home and put each person's budget in an envelope, in cash. When it's gone, it's gone–and you're done.
Most important, don't spend beyond your means. If you run up a big bill to celebrate the holidays and then pay it off at a leisurely pace, the following months will likely cause financial heartburn. Consider the example of a $2,000 credit card balance at 18% interest. If your minimum payment is 2% of the balance due each month, it will take you about 19 years to pay it off and you'll pay $3,862 in interest.
Holiday traditions beyond gifts
The special feeling about the holidays doesn't always come wrapped in a box and tied with a bow. Here are a couple of ideas to make the holidays more meaningful and more affordable:
- Mark the holidays through traditions rather than gifts. Many families pool their efforts to help out others instead of buying each other gifts. Your family may choose to buy food or gifts for another family in need. Contact churches and community centers in your area and ask for recommendations.
- Make the holidays special. Talk with your friends and family about what they like and dislike about the holidays. From those discussions, build a plan that decreases the attention on gift giving.
And don't forget the very foundation of the holidays–it's a time of charity, goodwill, peace, and joy. Nothing that you do with love and care should leave you feeling inadequate in any way.