Holiday Spending Tips to Help You Beat Inflation
Prices are up everywhere, and it’s no secret that the impact of years-long inflation is hitting our wallets hard. The holidays, with their associated costs for gifts, travel, and festive celebrations, can be particularly challenging. But don’t worry — these tips can help you keep your holiday spending under control and enjoy the season with less financial stress.
Avoid the Holiday Debt Trap
In the past, you may have subscribed to the buy now, pay later (BNPL) philosophy, but it’s important to know the long-term financial effects of going into holiday debt.
In 20221:
- 63% of Americans who took on holiday debt did not plan to do so.
- $1,549 was the average holiday debt - a record high.
- Over 1/3 of those debtors expected it would take 5+ months to pay off.
If you’re only able to pay the minimum amount due, you could be saddled with debt for years depending on your credit card’s interest rate. As of July, the average credit card interest rate in America was 24.84%. 2 Let’s assume you have $1,550 of credit card debt with a 24.84% interest rate. If you make $50 monthly payments, it would take you over four years to completely repay this debt, and it would include over $950 of total interest.
Bottom line: A haphazard approach to holiday spending could end up costing you much more in the long run.
Holiday Budgeting Tips
Use this list to stay on track for an economical holiday season.
- Shop Early. Shopping early saves you money in several ways. It helps you avoid the price gouging that often comes with last-minute shopping. For example, you won’t have to deal with expedited shipping costs to make sure your gifts arrive on time. You’ll also avoid impulse buys that can happen when your first choices are out of stock.
- Cancel Unused Subscriptions. Take a good look at your monthly subscriptions. Are you paying for streaming services you rarely use, or meal plans you don’t have time to cook? Would your dog still love you without a monthly pet box? Canceling these can free up extra funds for holiday spending. Try using an app to track and eliminate any unused subscription services.
- DIY Decorations. Holiday decorations don’t have to be expensive. Check out the countless online tutorials that show you how to make beautiful decorations at a fraction of the store-bought price. You’ll be amazed at the displays you can create with a few household items, and you’ll have fun doing it.
- Book Travel in Advance. If you’re traveling for the holidays, booking early is key. Airline and hotel prices often increase as the holidays approach. To avoid boosted rates, it’s recommended you book domestic flights 28 days before departure and international airfare around 60 days out. 3 Hotel booking is more nuanced in that you may be able to find a great last-minute deal because of cancellations, but this strategy comes with a risk. Consider booking a room with no cancellation fee at least a month in advance, then check prices the week of your trip for better deals.
Get Creative!
There are many ways to embrace the holiday spirit and stay within your budget. Try some of these unique ideas to save:
- Gift your time: Sometimes the best gifts aren’t things, but experiences. Offer your time to help someone with a project, babysit, or cook a meal. These thoughtful gestures can mean more than a trendy gift.
- Buy in bulk: For items like wrapping paper, cards, and beverages, consider buying in bulk. Bigger warehouse-style stores offer great deals on these items.
- Homemade gifts: If you have a knack for baking or crafting, put your skill to good use. Homemade cookies, a knitted scarf, or a personal photo album show you put time and care into one’s gift.
- Secret Santa: For a large family or group, suggest the classic Secret Santa game. This way, everyone only buys one gift, saving the overall cost for everyone while keeping the gift-giving spirit alive.
With these tips, you can enjoy a festive and financially stress-free holiday season. Plan ahead, spend wisely, and avoid starting the new year with a mountain of debt.
Sources:
[1] LendingTree, “Average Holiday Debt Nears $1,550, Highest in LendingTree Survey’s 8-Year History,” December 27, 2022.
[2] LendingTree, “Average Credit Card Interest Rate in America Today,” July 8, 2024.
[3] Expedia, “2024 Air Travel Hacks Report.”
10/23/24