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, and in the remaining 5 the percentage was at least 15%. The jewelry sector received the biggest boost, 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 12 tips for dealing with the stresses of Yuletide spending:
Before the Holidays..
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 discount.
2. Make a Budget for Everything Holiday-Related
The reason people spend more in December is because there are certain things they only ever buy in that month, such as gifts for family and friends, or food/decorations for Xmas parties. Budgeting the rent or mortgage is easier because you pay the same amount every month. December expenses are more unpredictable. Try to write down a budget before the holiday period, with items in one column and expected costs in the other. Then work out what you need (or what you can afford) and what you can do without.
3. 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. Some 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.
4. 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, the association recommends spacing out your financial decisions instead of making too many decisions at once and becoming overwhelmed. This can apply to spending too. If your holidays consist of several major spending decisions, try to address each one at a time instead of all at once.
5. Have an Emergency Fund
One of the reasons people get so stressed about holiday spending is because they worry about going into overdraft or not being able to pay back their credit card provider. An emergency fund creates a buffer – and it doesn’t need to have a big impact on your disposable income. These days, you can get 2-2.3% annual interest just by opening a savings account with an online bank. Some banks allow customers to make automatic deposits from their paycheck to their savings account – even if it’s just 2 or 5 bucks. That might not seem like much, but $5 a week or month, for a couple of years, plus interest, becomes a decent emergency fund.
6. Be Open With Loved Ones
Money is obviously a sensitive topic, and more often forces families apart than bring them together. With that said, if you feel comfortable enough sharing your stresses with loved ones, it may be worth explaining your feelings to them before the holidays – and using that to lower expectations. If you feel under pressure to spend more than you can afford on gifts, why not ask your loved ones to agree to a spending cap this year?
During the Holidays…
7. Track Your Spending
This one is really quite simple. If you keep a list of each expense, it makes it much harder to overspend. Find a way that works for you. There are plenty of free apps and websites that can help you track your spending, or you could use the Notes tool on your phone.
8. 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 is 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). This is one of the advantages of using a personal loan for holiday spending.
9. Avoid Impulse Buys
It sounds cliché, but it’s true. If money is an issue during the holiday season, try to stick to your budget. Going back to our last point: leaving your credit cards at home and carrying around the exact amount of cash you can afford to spend is a great way of avoiding impulse purchases. If you do most of your spending online, decide on a spending limit and then move that amount into a PayPal account or prepaid card or something other than a credit card that you can pay with.
10. 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.
11. 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. Just be aware that certain actions – like suspending payments – can impact your credit score.
At the End of the Holidays…
12. Give Yourself a Reward
Staying on top of financial stress isn’t easy, so make sure to reward yourself at the end of the holiday period. Your reward doesn’t have to be expensive: it could be something as simple as spending time with family, having a quiet drink with a loved one, or just taking a few hours to go someplace you love being.