Spending Tips: Avoid Holiday Money Bleed
We love the holiday spirit, just not the holiday depletion of funds. Here’s how you can have fun and stay in the black.
Why you need a holiday budget
This year, consumers plan to spend an average $1,048 for the holidays, according to the National Retail Federation. “The holidays are one of those things that can kill a budget,” says Nora Clifford, an AXA Advisor. “People almost never account for the added expenses of the holiday season, and when they do, they tend to underestimate how much they’ll be spending.” But with a little planning, you can save on your biggest line items and close out the year within budget.
Big-ticket item: Food
Creating an estimated food budget for the holidays means asking yourself a few questions. Will you be eating out more than normal? Will you have more mouths to feed for a certain number of days? Will you be hosting any gatherings? Even if you aren’t planning to entertain others, will your holiday menu for yourself and/or your immediate family be more expensive than usual? Keeping all of these answers in mind, try to set a specific amount that you’re willing and able to spend in this category, and be mindful of sticking to it.
Potential ways to save: It’s tempting to overbuy at this time of year, especially if you’re expecting guests, but Clifford says that’s a recipe for waste. Instead, make a realistic list of what people will eat while they’re at your house and actually use it. (You can always get more.) If you’ll be dining out or heading to the grocery store more often, be sure to sign up for a credit card that offers you cash back rewards. This is a great way to offset some of the cost of food during the holidays (assuming you pay the card off in full at the end of the month, of course).
Big-ticket Item: Gifts
Make a list of everyone you’ll buy for this year and start brainstorming ideas ASAP. Working a gift budget into your overall holiday budget will mean setting an estimated amount you’d like to spend on each person. This may seem like it goes against the holiday spirit but forcing yourself to stick to a fixed amount might actually make you get a little creative, which has a way of bringing about some of the most meaningful gifts.
Potential ways to save: Little items can add up quickly; and one well-thought-out gift will likely be more appreciated than a bunch of smaller tokens anyway. Alternatives to traditional gifts can also be easy ways to save money and make memories at the same time. For example, why not take a cooking class with your best girlfriends? Or keep an eye out on discount travel sites like Groupon and Travelzoo for an inexpensive weekend getaway you can take together during the off season.
Big-ticket item: Decorations
If you already have tons of holiday décor, use what you’ve got! If you tend to get swept away by all the baubles, though, you might want to add in a line item for decorations.
Potential ways to save: Besides taking stock of what you have before buying anything new, consider doing a holiday décor swap with friends or family to liven things up. Similar to a jewelry or clothing swap, putting together a holiday swap is an easy way to infuse some new decorations into your space without spending a ton of money — and it’s also a fun way to host a no-fuss get together with friends over the holiday. If you still feel like you need more, shop the sales immediately after the holiday to load up on items for next year.
Big-ticket item: Parties/events
The holidays are filled with opportunities to host parties, but attending them adds up, too. Think: hostess gifts, transportation, festive clothing, etc.
Potential ways to save: If you’re hosting, have a brunch as opposed to a dinner, or have friends over before or after dinner for a festive nightcap, suggests Clifford. Consider less expensive alternatives like Prosecco or Cava in place of Champagne or buy your wine by the case at retailers who offer discounts. If you’re attending parties, put together a carpool with acquaintances in similar friend groups and switch off on playing designated driver to avoid large taxi or Uber bills. Another good way to save: Don’t say yes to everything! Preserve your energy (and money) for those events you really care the most about. It’s okay, really.
Big-ticket item: Travel
A holiday at home can be nice (and less stressful), but for many, it’s just not realistic. In 2018, AAA projected that 54.3 million Americans would travel over the Thanksgiving holiday, with 112.5 million traveling during the longer year-end holiday season.
Potential ways to save: With the holidays right around the corner, the time has passed to book your flights in advance (although it’s a good idea to keep this in mind for next year, since that’s the best way to score good deals). But if you do plan to spend heavily in one area (on your flight, for example), then try to dial back your spending in other ways, like avoiding travel on the most expensive days (like the Wednesday right before Thanksgiving and the Sunday after) and looking for bundled deals if you need to book a number of services, like a flight, car and hotel.