The holiday season is a time for family, fun and relaxation. For those of us who are in debt or looking to save for the future, the holidays can unfortunately feel like a time of stress and worry.
There is an immense amount of societal pressure to buy during this time of year. According to NerdWallet, on average Americans will spend $660 on Christmas gifts alone. Given that the average household adjusted gross income in the US is only $67,565, that can be a lot of dollars to commit to one specific day.
Additionally, there appears to be a lack of understanding of the long-term ramifications of “putting it all on the credit card”.
24% of millennials are still paying back their purchases from last Christmas, according to the same NerdWallet survey. Those nasty credit card interest payments will be holding these folks back from important wealth building steps like saving for an emergency or building their retirement savings.
Let’s bring back the Christmas joy and take control of our money. Here are 10 smart ways to save during this holiday season:
1. Create a Budget
You won’t be able to control your holiday spending without first setting limits. Creating a budget is the best way to start.
If you’re into spreadsheets, using a cash flow management system like Tiller can help you easily categorize your holiday spending and sync transactions from your accounts. If FinTech isn’t your thing, sit down today with a pen and paper and hash out the numbers.
List out the people you’ll be buying for this holiday season and how much you want to spend on each person.
people to consider for your list:
- Adopt-a-Child/Family Charities
Put a dollar amount next to each person and total it up.
Too much? Adjust accordingly so you can have a reasonable number to work with.
If you’ve been tracking your spending over the years, look back at what you spent last year and use that as your baseline for the overall budget.
2. Track Your Spending
Creating a budget can make you feel good, but if you don’t track your spending then it’s not worth it.
I prefer online tracking systems like Tiller because your transactions are automatically uploaded into a spreadsheet. There’s no fumbling around with receipts and paper lists. Technology does the work for you.
3. Use A Shopping List
When you’re out and about shopping, be sure you have that list you created during the budgeting process. This will help you stay on track for what you can buy, who you’re buying for and how much you can spend.
It’s easy to stray, isn’t it?
“Zoey would love this new bike!” OR “Mom needs this foot massager!”
I’ve been there. I’ll be there again. If we have a list and a limit, it’s easier to stay the course and not go over budget.
4. Talk To Your Family About Limits
Let’s say you have a family of 8 people. You want to show them all your love, but the cost of buying 8 thoughtful gifts puts you way over your budget. It’s time to have a discussion about the realities of your situation.
They are your family. If they truly love you, this conversation won’t be difficult. In fact, they may thank you for bringing it up!
Recommend an alternative like a Secret Santa tradition where each person buys for one individual in the family instead of all 8. You can pick random names out of a hat and each year you’ll get someone new. We’ve been doing that for years in my family and it’s actually a lot of fun.
5. Skip the Flashy Gifts
Expensive luxury items like watches, gadgets and jewelry can definitely be nice to give and receive as gifts. Over time though, the excitement fades. We’re ready for the next “new thing” before we know it.
Instead, consider giving thoughtful gifts that will improve your loved one’s lives and provide them with a lasting memory:
- Good Books that have changed your life
- Spa Gift Certificate (Massage, Pedicure) for relaxation
- Concert Tickets
For kids, use the same thought pattern.
Select something that will help them learn, grow and experience life instead of the newest shiny plastic toy:
- Arts and Crafts
- A visit to Legoland, the Zoo or the local Water Park
- Board Games (Some of our family favorites are Sorry, Jenga or Scooby Doo Fright at the Fun Park)
6. Shop Used
It's amazing what inexpensive treasures we can find when we buy things gently used. Clothes, books, furniture and even cars. Just because someone else has used it, doesn’t mean it’s worthless.
Last weekend, we went to our local St. Vincent De Paul and our 5-year old daughter Zoey found this Magic Kit for $3.
She paid for it with her own money and then experimented with the kit for 4 hours! For our next family get together, she’s going to put on an epic magic show for us.
resources to consider when you’re shopping used:
- Thrift Stores (St. Vincent De Paul, Salvation Army)
- Facebook Marketplace
7. Look for Inexpensive Traditions
Throwing lavish parties isn’t required to make happy memories during the holidays.
Consider adopting inexpensive family traditions like playing board games, cards or sledding with your kids. This is a smart way to save money and have fun with the family.
When's the last time you had a snowball fight?!
8. Give Your Time
Most all us want to be charitable and kind to our neighbors in need. If we don’t have the ability to give our money this holiday season, we can always give our time.
If you’re looking for ways to give back to your community, you can always speak with the leaders at your local church, school district or use services like Volunteer Match.
Volunteer ideas to consider:
- Deliver meals to people in need
- Serve dinner in a local soup kitchen
- Donate time or food to your local food bank
- Save 3 lives by donating blood to the Red Cross
- Become a Celebrity Reader at a local elementary school
My 5-year old daughter Zoey wants to go to Disneyland.
I don't want to spend freaking $5,000.
After learning about travel rewards, it appears we can both get what we want.https://t.co/ruq5fUXweL
— Andy Hill (@AndyHillMKM) November 16, 2017
9. Remember the Purpose of the Holiday
It’s not stated anywhere that we NEED to go into debt during the holidays to buy gifts for people. That’s not the point of this season.
It's about spending time with your family, celebrating your religious beliefs and showing kindness toward your neighbors. I know I’ve personally found the most joy during Christmas when I keep those three points top of mind.
10. Save Up for Next Year with a Sinking Fund
When this holiday season is all said and done, make sure you plan for next year’s expenses with a Sinking Fund. This easy savings plan will help bring back the joy and decrease the stress.
Steps for setting up your Sinking Fund:
- Calculate how much you spent overall this holiday season. If you use a system like Tiller, this will happen automatically for you. If you're more into the pen and paper method, calculate how much you spent through the receipts you saved.
- Starting in January, save 1/12 of that amount each month in a separate account. For quick math, let’s say you spent $1,200 overall this year on holiday expenses. You’d need to save $100 each month until the following December.
- In December of next year, you’ll have enough saved up to cover the costs of your holiday season.
With a Sinking Fund, you won’t dread the upcoming holiday thinking about the bills you’re going to be paying. You’ll embrace it because you’re prepared and ready.
How are you saving this holiday season?