Many look forward to cozy family gatherings, festive meals, and gift exchanges as the holiday season approaches. Inflation, however, is straining holiday budgets across the country. According to a recent survey from WalletHub, 68% of people expect Santa to be less generous this year. Due to this, they are adjusting their spending, taking on credit cards, and trying new ways to manage holiday expenses.
In this post, we’ll outline some clever strategies for enjoying the season without emptying your wallet and exclaiming “Bah humbug.” Whether you’re looking to save money on your credit card or come up with budget-conscious gift ideas, let’s explore ways to celebrate.
1. Make a naughty-and-nice budget list.
Your holiday budget can be like Santa’s list, just more practical. To start, write down everything you will need, including gifts, groceries, and travel expenses. Then, divide the list into “naughty” (unnecessary) and “nice” (essential) categories.
Here’s how it works;
- Naughty list. This list includes items you can skip or substitute for this year. Is it necessary to buy new Christmas lights when last year’s twinkle just fine? If not, they will be put on the “naughty” list.
- Nice list. In the “nice” category are items such as food for holiday dinners, fuel for travel, and thoughtful (not extravagant) gifts.
You can use this simple exercise to focus on meaningful expenses and eliminate the fluff from your holiday budget.
2. Put a creative spin on your holiday décor.
Remember that holiday spirit isn’t about the price tag—it’s about your creativity. Consider upcycling or crafting your decorations this year. In other words, bring out your inner Buddy the Elf.
The following are some ideas you might find useful;
- Natural décor. Bring pine cones, branches, and berries from outside for a rustic holiday feel. You can turn ordinary objects into festive accents with a little spray paint or glitter.
- DIY ornaments. Take advantage of paper, fabric, or even last year’s holiday cards to create your own ornaments. A small project like this can be fun for the whole family and is much cheaper than buying store-bought décor.
- Reuse and rearrange. Rearranging your usual decorations can sometimes make them feel fresh and festive. It’s even possible to swap items with friends or family to get a “new” look without spending a dime.
Remember, homemade decorations aren’t just budget-friendly. They’re also a way to create memories as you craft and create with loved ones.
3. Think outside the box when it comes to wrapping.
Gift wrapping can be pretty expensive. The worst part? Almost all of it ends up in the trash. So, what’s the harm in getting creative to save money?
If you are wrapping your gifts, consider using newspaper, brown paper bags, or even old maps. You could attach a little ribbon or ornament, and you’re done! Aside from saving money, it is also eco-friendly and one-of-a-kind.
4. Use digital greetings instead of holiday cards.
There is nothing wrong with sending cards during the holidays, but the costs can quickly add up. Printing, stamps, and envelopes can shatter your budget. Instead, consider sending holiday e-cards or making a video message for your family and friends.
This is more eco-friendly and cuts costs, but it is also possible to add a personal touch.
5. Cash in on credit card perks.
Did you know that more than half of Americans plan to apply for a new credit card this holiday season to help with expenses? WalletHub recommends choosing a card with cash-back rewards or a 0% APR option for maximum savings and debt minimization.
With its 2% cash back on all purchases, 0% intro APR for 15 months, and no annual fee, the Wells Fargo Active Cash card is their top pick. With this offer, shopping is made easy, you earn a little back, and you don’t have to pay interest fees for more than a year.
Bonus tip: Use cash-back cards for big holiday expenses, such as groceries, travel, or decorations. These rewards can be a nice boost after the holidays and help with your January bills.
6. Budget smartly for gifts and gatherings.
Although it is easy to go overboard with gifts and celebrations, nearly half of Americans are still paying off holiday debt from last year. Rather than complicating your budget, why not simplify it this year?
Listed below are a few ideas;
- Secret Santa gift exchanges. These exchanges are a great way to keep costs down if you have a large group to buy for. You can keep your budget in check by focusing on one meaningful and affordable gift instead of buying it for everyone.
- Give gift cards. Gift cards are a great option if you are an overspender or worried about your usual gifts costing more than you anticipated. It may seem basic to purchase gift cards for holiday gifts, but it allows you to avoid high inflation.
- DIY and thoughtful gifts. Gifts made from scratch and baked goods can be just as appreciated as anything bought from a store. If you want to show your love without spending a lot, consider making photo albums, baking treats, or writing heartfelt letters.
- Think second-hand. You can find unique, low-cost gifts in thrift stores, yard sales, or even in your own home.
- Plan low-cost gatherings. 42% of people say family influences their holiday spending. So, instead of going on expensive excursions, plan budget-friendly hangouts at home like potlucks or movie nights.
Sticking to a budget when it comes to gifts and gatherings keeps the holiday spirit alive without sacrificing finances.
7. Make a change in your spending habits.
If you reduce your discretionary spending as soon as possible, your holiday gift budget will be more flexible. Due to the higher prices, it’s especially true this year. Until you’re financially stable, you might want to cancel one of your streaming services, for example.
Additionally, develop money-saving habits like eating at home or shopping from the sale rack, and look for online coupon codes and cashback programs from Rakuten and Ibotta for additional savings. Get your gift lists ready quickly if you want a substantial discount on your purchases. Consider shopping on Black Friday or Cyber Monday. Subscribe to your favorite retailers’ newsletters for exclusive deals and promotions.
These tools give you the satisfying feeling that you have outsmarted the Grinch. And who doesn’t love that feeling?
8. Stay away from holiday debt traps.
As the holiday season approaches, avoiding debt becomes increasingly important. As interest rates rise, it’s more important than ever to avoid high-interest charges on credit card balances due to holiday debt.
To prevent holiday debt hangovers, here are some tips;
- Set up a holiday savings fund. This way, you can set aside money for gifts and celebrations. A high-yield savings account can be a good place to invest any holiday shopping money since they tend to pay much higher interest rates than regular savings accounts. You won’t earn hundreds of dollars in interest a month, but you’ll still earn more than you would with a traditional savings account.
- Use layaway plans, but only if you must. Some retailers offer this option, allowing you to pay gradually for items without requiring a credit card.
- Consider using a debit card or prepaid card. This will keep your spending in check and prevent overspending.
9. Get a little help from holiday shopping bots, not elves.
If you’re overwhelmed by shopping, tech tools can help. 55% of people surveyed by WalletHub said they would like AI robots to do their holiday shopping.
Digital tools can help with the following;
- Price comparison apps. Apps like ShopSavvy and Google Shopping allow you to track prices across multiple sites to find the best deal.
- Coupon extensions. For example, you don’t have to dig for coupon codes at checkout with Honey and Rakuten extensions.
10. Reassess your travel plans.
Travel costs might concern you if you visit family or take a holiday vacation. Small changes can, however, make a huge difference.
Here are some budget-friendly travel tips;
- Book in advance. If you book flights or accommodations earlier, you’re more likely to find lower prices.
- Consider alternative destinations. Take a look at nearby destinations that offer similar experiences at a lower cost if you are open to change.
- Use points & rewards. Look at your travel rewards or points accumulated to see if they can help offset your expenses.
Often, a cozy holiday at home can be just as magical as a vacation with the whole family.
11. Think twice about charitable giving.
As Americans give back during the holidays, inflation is affecting their donations. WalletHub’s survey found that nearly 75% of people are affected by rising costs in their charitable contributions.
Giving back, however, does not have to mean spending a lot;
- Donate your time. By giving back to a local food bank or shelter, you can make a meaningful difference in the lives of others without needing to spend a lot of money.
- Host a donation drive. If giving cash is difficult, consider organizing a drive with neighbors or friends. A few people can make a huge difference by donating canned goods, blankets, and toys for children.
12. Shop early so you’re not spending to “save.”
It is easy to overspend on holiday shopping if you leave it until the last minute.
“If you walk into a store under a tight deadline to buy something for an individual, whatever they have available and whatever the price is, that’s what you’re walking out the door with. Try to avoid that at all costs,” said Emily Irwin, senior director of advice for Wells Fargo.
It is also possible to pay more for shipping when you shop online at the last minute. Why? Consumers may spend more to qualify for free expedited shipping during the holiday season.
“That’s what I like about getting started now, we’re not racing the clock to spend more on expedited shipping. We’re not playing mental games with ourselves such as, ‘If I spend on this, I can get free shipping,” added Ashley Lapato, a YNAB personal finance expert and owner of @TheOrganizedWallet TikTok account.
Wrapping It Up: Have a Joyful, Budget-Friendly Holiday
Don’t let inflation play the Grinch this season. Instead, if you use the right tools, are strategic, and focus on what really matters, you can have a festive and fulfilling season without breaking the bank.
FAQs
How can I budget for the holidays when prices are rising?
During inflationary times, budgeting is even more important.
- Set a budget. Be realistic about how much you can spend and stick to it.
- Prioritize. Don’t forget to focus on the most important traditions and gifts.
- Use budgeting tools. A budgeting app like YNAB or Mint can help you keep track of your spending.
Are there ways to save money on holiday shopping?
Absolutely!
The following tips will help you;
- Shop sales. Take advantage of seasonal sales, coupons, and discounts.
- Compare prices. To find the best prices, use price comparison websites.
- Buy generic brands. Often, they offer lower prices for similar quality.
- DIY gifts. Making your own gifts is a great way to save money and make them more meaningful. If you haven’t made gifts before, you must know that it takes a ton of time. Plan next year and do it like I do. I always do “Holiday in July,” which means beginning anything I want to make personally by July 1.
- Shop secondhand. You can find treasures at thrift stores and consignment shops.
How can I save money on holiday meals?
The following ideas might be helpful;
- Plan your menu. Take advantage of what’s on sale to create a menu.
- Cook in bulk. For future meals, prepare large quantities and freeze leftovers.
- Buy in bulk. When non-perishable items are on sale, stock up.
- Shop smart. Consider buying store brands when comparing prices at different stores.
What if I can’t afford all the holiday traditions?
It’s okay to cut back. Don’t forget to pay attention to what really matters to you and your family. The following ideas might be useful;
- Simplify traditions. Don’t give too many gifts or decorate too much.
- Virtual celebrations. Face-to-face video calls offer a way to connect with loved ones.
- Community events. You can attend events free of charge or at a low cost during the holiday season.
How can I avoid holiday debt?
You can avoid debt by keeping a budget and avoiding using credit cards.
- Pay with cash or debit. By doing this, you can remain accountable.
- Avoid impulse purchases. Always stick to your list.
- Consider a holiday savings account. By starting now, you can get a head start on saving for next year’s holiday expenses.
Image Credit: Sean P. Twomey; Pexels
