Whether or not you celebrate the holidays, it may feel impossible to get through the winter months without spending a little more than you planned. And truth be told, there are actually some good reasons for buying things during the holiday season (the deals!).
But let’s be real–it’s very easy to let your holiday spending get out of hand. Buying gifts for friends and family, decorating your apartment or house, and indulging in holiday parties can be a lot of fun, but they can also do some serious damage to the financial goals you’ve been working toward all year!
The good news is you can have your eggnog and drink it too; you just have to do a little planning ahead. Follow these five tips to manage your holiday spending so you don’t start the new year with a (debt) hangover!
1. Create a holiday shopping Goal.
Let’s be clear: There’s nothing wrong with a little holiday spending, as long as it doesn’t get in the way of your other financial goals, like paying off debt or paying your bills on time.
If you plan on doing any additional spending around the winter months, that’s totally cool: You just need to budget for it. Figure out how much you have available to spend, in total, on the holidays. We’d recommend creating a Savings Goal in Simple for your holiday shopping, so you can save up for it over time, and keep it separate from your other Goals (ps- you can do this year-round!
Be sure to include these holiday expenses in your budget: - Gifts for friends and family - Gifts for teachers, mentors, and other - Seasonal decorations - Food/drinks for holiday parties (that you host or attend) - Things you plan to purchase during holiday sales
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2. Set aside an account buffer.
Another way to protect your finances from holiday spending is to create an account buffer!
An account buffer protects you from draining your account balance. It can be used as a mini-emergency savings, and can be seen as a baby step toward a decent emergency savings. Save up one to two weeks of your income for a solid account buffer to help cover any higher-than-usual grocery bills or irresistable Black Friday purchases.
Depending on your line of work, the end of the year is usually slower workwise, and if you’re your own boss, you may be raking in less dough. Or you might decide to take unpaid time off to spend more quality time with your loved ones. To make sure you stay on top of things moneywise, cut back on your expenses. While you may be spending more on travel, buying gifts, and socializing, see how much you can cut back in categories you have more control over, such as personal items or purchases that can wait. Conversely, if time permits, you can also take on extra side hustles to earn some cash.
3. Cut down on other Expenses.
You can also pad your holiday spending by finding ways to reduce other Expenses throughout the season. Here are a few of our favorite ideas: - Buy fewer groceries and eat leftovers from holiday parties. - Make big batches of soups or chilis and bring them to work instead of buying lunch. - Take an eco-friendly approach to wrapping gifts: Don’t wrap them! - Keep holiday decorations simple to cut down on costs. - Enjoy free activities like light displays and parades. - Host happy hours at home instead of going out. - Host potluck-style meals instead of paying for holiday dinners yourself.
4. Budget based on your financial situation.
It can be tempting to feel like you have to reciprocate when someone gives you a fancy gift, but don’t. The spirit of gift giving relies on the idea that a person gives what they want to give, without the expectation of receiving something of equal or lesser value in exchange.
If you’d like to give someone a gift, give them something that you can afford. Focus on making the gift thoughtful, rather than trying to match their spending–especially if you risk taking on credit card debt in the process.
5. Think presence, not presents!
Finally, remember to check in with yourself often throughout the holiday season, to make sure you’re giving because you want to–not because you feel obligated to. Ask yourself before every purchase, “Will buying this really make my recipient (or me) happy? How will I feel about it next week, next month, and next year?”
In our consumption-driven world full of personalized ads, we’re used to buying things—things that we probably don’t need, and might not even want. Often, small gifts and gestures make the biggest impact, because what we’re really all craving is connection!
For long-distance friends and family, a phone call could be an even better investment into your relationship than a present. For friends and family nearby, hand-delivering a framed photo, a box of homemade cookies, or a thoughtful card with a handwritten note can create a richer moment than simply buying a gift. You can also invite a friend out for coffee or lunch.
While presents that you buy can be nice, remember it’s also a gift to simply be present with others!
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Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner banks, The Bancorp Bank and BBVA Compass, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.