Money News

How to avoid holiday overspending

‘Tis the season to be spending? It sure feels that way. There's pressure to spend lavishly during the holidays — in fact, 70% of Americans admit they typically overspend this time of year. And a new survey has revealed that consumers are planning to spend a lot more this holiday season compared to last year.

With ongoing inflation driving up prices of holiday staples like gifts, experiences, travel, and entertaining, it will be even easier this year to spend more than you intended. Thankfully, you don't have to choose between having an unforgettable holiday season and sticking to your budget. Being generous doesn't always mean spending a lot of money — it's the thought and effort behind the gift that truly matters. Here are some tips to help ensure your holiday spirit doesn’t come at the expense of your financial health.

1. Set your budget and make a plan. Before you start shopping, decide the total amount you want to spend. Make a list of people you want to buy gifts for, set a dollar limit for each person, and brainstorm gift ideas with their preferences and personality in mind. Be sure to include any other holiday expenses on your list, like decorations, meals, and travel. Knowing your spending limit and making a list will help you stay organized, avoid impulse purchases, and stick to your budget.
2. Focus on experiences. Instead of spending a lot on material items, consider giving experiences to create lasting memories at a nicer price. Take a loved one on a “date” such as a trip to a local museum or zoo, a spa day, a cooking class, or dinner at their favorite restaurant. Deal sites such as Groupon and Living Social offer a wide range of experiences, from dining to ziplining, at discounted prices that fit just about any budget.
3. Look for sales and discounts. More than 60% of consumers say sales and promotions are even more important to them this year than last year. To maximize your budget, start your holiday shopping early to take advantage of sales and discounts. Compare prices online to find the best deals, then search for coupons and promo codes to save even more money. Use free tools that will automatically track prices and notify you when items go on sale, such as ShopSavvy and Honey.
4. Set expectations. Discuss gift buying with family and friends ahead of time to avoid any misunderstandings or pressure to overspend. You might suggest a Secret Santa or white elephant gift exchange, where each person in the group only needs to buy one gift. If you can’t get together in person to celebrate, each person can mail their gift or shop online and have it delivered to the recipient’s home. Once all the gifts have arrived, you can gather online to open them together.
5. Give the gift of time or service. Your time and effort is a priceless gift. Help family and friends by offering to babysit, clean their house, run errands, teach a skill or hobby, plan a special outing, or host a game night or movie marathon. Make a coupon book for your favorite person and let them redeem the vouchers for favors such as a homemade meal or relaxing massage. These thoughtful gestures can be more meaningful than material gifts.
6. DIY gifts and decorations. Consider making homemade gifts and decorations — they’re more special, less expensive, and better for the environment. You can also involve your family and friends in the process, making it a fun and memorable activity. When wrapping gifts, instead of store-bought wrapping paper, try using old newspapers, fabric scraps, or brown paper you can decorate.
7. Plan a potluck. Hosting a holiday gathering? Make it a potluck! Invite everybody to bring a dish, provide the basic necessities like dishes and utensils, and enjoy seeing what happens. Hosting a potluck not only reduces your expenses, it also adds variety to the menu, lets everyone participate, and gives guests a chance to share their favorite dishes. Best of all, it gets you off the hook for cooking an entire meal yourself!
8. Remember the true meaning of the holidays. The holidays are about spending time with loved ones and showing gratitude. Focus on creating meaningful experiences and memories rather than solely relying on material gifts.