10 Tips for Dealing With the Financial Stresses of the Holidays

Nadav Shemer
How to deal with the financial stress of the holidays
Money is a leading cause of stress, and no time of year causes more financial stress than the holidays. Every year around the holidays the same shopping frenzy takes place–and it’s hard not to get caught up in all that.

According to a DataCamp survey looking at spending between Thanksgiving and New Year’s Eve, in 8 of the 13 retail sectors more than 20% of spending took place during the holiday season. The jewelry sector receives the biggest boost toward the end of the year, with 28% of annual spending in the holiday period.

In short, Americans spend at a much faster pace during the holiday period than they do during the rest of the year. Here are our 10 tips for dealing with the stresses of Yuletide spending:

1. Do Some Advance Planning

People tend to associate the holidays with sales, but the truth is you can save a lot of money by buying certain things in advance. For example, if you know you’re going to be traveling cross-country to spend the holidays with relatives, purchase your tickets ahead of time when flights are cheaper or the airlines are running promotional deals. Also: use Black Friday. This doesn’t only mark the start of the holiday period; it’s also a chance to buy gifts at a serious discount.

2. Write Down Ways You Can Cut Back

While we’re on the topic of budgeting, if the amount you expect to spend is greater than what you can afford, take a moment to think about what you can cut back on. Go over everything one by one. Things like rent/mortgage, electricity, weekly food shopping are essential. Other things are not. You might be surprised what you can cut back on when you think about things carefully.

3. Make One Decision at a Time

According to the American Psychological Association, when people are faced with multiple, back-to-back decisions, their willpower can easily be depleted. Therefore, spacing out your financial decisions instead of making too many decisions at once can prevent the feeling of being overwhelmed. This principle can apply to spending too. If your holidays consist of several major spending decisions, try to address them one at a time instead of all at once.

4. Have an Emergency Fund

One of the reasons people get so stressed about holiday spending is because they worry about accumulating too much debt. A savings account or other type of emergency fund creates a buffer–and it doesn’t need to have a big impact on your disposable income. True, interest rates have dropped significantly in 2020 as part of the economic fallout of COVID-19, and the best rates found at online banks are now below 1% instead of the 2%-plus that was being offered in 2019. But opening a savings account is still a great way to put away money in case of emergency. Some online banks allow customers to make automatic deposits from their paycheck to their savings account each month. Soon enough, you’ll have money to fall back on after holiday spending.

5. Don’t Buy It If You Can’t Afford It

“I've discovered a unique new program for managing your debt: don't buy stuff you cannot afford,” Chris Parnell, playing a financial advisor, tells Steve Martin and Amy Poehler in a 2013 holiday season skit on Saturday Night Live. This is a good rule, although admittedly not applicable to all situations. For example, for 99% of Americans, it would be impractical to buy a house without going into debt (i.e. a mortgage). However, it is a sound rule when the items in questions are smaller–such as holiday gifts. So, when doing your holiday spending, don’t buy things you can’t afford.

6. Use Cash

One of the reasons people these days overspend more than in the past is that we’ve lost our physical connection to money. When you use cash to buy something (or just carry cash in your pocket), it gives you an appreciation for what money really is. Use a $50 bill from your pocket and you get a sense that you have just spent 50 bucks. Put it on the credit card and it becomes easier to forget (and harder to track in real time). 

7. Get Creative with Gift Giving

They say it’s the thought that counts, and nothing tells a loved one you’ve been thinking of them more than a unique gift you put time into creating. People spend so much on gifts around holiday time–and half the time the item isn’t even something the recipient wanted. Your recipient might appreciate a creative DIY gift more than an expensive one–and it will certainly save you money.

8. Find an Activity That Helps You De-stress

Obsessing over any topic isn’t healthy. If financial stress is wearing you down, go do something that helps you unwind. Go for a run, shoot some hoops, walk the dog, do some mindfulness, play a video game. Whatever it is you enjoy doing, do it. If you really can’t stop stressing, consider talking to a psychologist or mental health professional.

9. Ask Your Lender for Help

People don’t always realize it, but your bank, credit card company, or online personal loan provider may be able to help you out by agreeing to a more flexible payment plan if you’ve pushed your spending debts past the point of no return. Just be aware that certain actions–like freezing payments–can impact your credit score, damaging your ability to borrow in future.

10. Remember What the Holiday Season is All About  

What’s the holiday season all about? Well, for kids it really is about the gifts. But for adults, it’s mostly about gathering together and seeing loved ones. More people than ever are feeling stressed this holiday season due to the tough economic conditions. So, why not make a pact with your loved ones to prioritize being together over spending on each other?

The Holidays Can Be a Fun Time

The holidays don’t have to be stressful. With a bit of financial planning and discipline, this holiday season could end up being what it was always supposed to be–a time for having fun and catching up with family and friends. 

Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He enjoys writing about the latest innovations in financial services and products.