The holiday season is a time of joy and indulgence for people worldwide. There’s a lot of food, fun, gifts, get-togethers, and more. Unfortunately, holiday festivities also come with a pretty hefty price tag, and many people wonder how they will foot the bill.
However, driving yourself to debt to “enjoy” the holiday season is foolish. After all, once the New Year festivities are over, you will have to spend the rest of the year paying the money back. That doesn’t mean you cannot or should not fulfill all your desires – it just means you have to be smart about it! Here are nine ways to avoid holiday debt this jolly season:
Limit Your Spending
Assess your true spending goals based on your actual holiday expenses. Your priorities will decide how you divide your holiday spending. Set a limit that you are comfortable spending for the holidays, and make sure it isn’t higher than what you have in your bank. Remember that the true spirit of the holiday season isn’t in material things, but in the joy and bonding that comes out of sharing a special time with special people. You don’t have to spend a lot of money to make an impact!
Estimate the Real Cost Of Your Holiday
It is advisable to add all expenses, big or small, to get the most accurate representation of your holiday expenses. Consider all your costs, including travel, events, food, entertainment, cards, gift wrapping, and delivery charges. By adding up all the possible costs, you can make sure you don’t run out of money, and you won’t need to use your credit card to make up what you can’t afford!
Prioritize the Cash in Your Wallet
One of the best ways to ensure that you do not spend more than you can afford it to use a cash-only system for holiday purchases. Jeff Rose, a certified financial planner and GoodFinancialCents website creator, believes that this is a practical yet often overlooked approach.
Using cash is straightforward compared to swiping a card – which, although it seems simple at the time, needs to be dealt with later. On the other hand, the cash-only approach increases your knowledge of each dollar you spend and lowers your possibility of overspending. Make sure to collect all your receipts so you don’t have to struggle if you need an exchange or refund in the future, and keep a close eye on your wallet. Unlike debit and credit cards, your cash will not come back once lost or stolen so keep it safe!
Use a Rewards Credit Card
While using a cash-only approach has many benefits, there are certain situations where it may be wiser to use a credit card, especially if it has good benefits and rewards. Credit cards offer additional benefits apart from convenience and security. As you charge your card, you will collect money, points, or miles. Plus, many credit card companies offer fantastic deals and discounts around the holiday season.
The downside, however, is that you might be easily tempted to overspend when your card offers a high limit. Remember that you are borrowing the money, which means you will have to repay it eventually.
One way to counteract this is by installing the banking app on your phone and transferring the exact amount to the credit card account every time you swipe your card. This will keep you from accumulating interest, help you have debt-free status, and receive rewards that aren’t impacted by late payments.
Space Out Your Purchases
Start shopping early and stretch it out over several weeks if you cannot afford to do it all at once. This way, you will not receive a big bill at the end of the month. This way, you can also reexamine your spending plan if you need to.
You can even begin buying gifts months in advance. Off season sales can help you find some pretty amazing discounts on items. Plus, gift items are often marked up around the holiday season, so you are almost guaranteed to pay more if you wait until the last minute. If you find something on sale or have some money saved up, why not buy your child’s Christmas present in May? You just have to make sure you find a really good hiding spot!
Use Discounts to Counterbalance Inflation
Stores, both online and offline, compete to attract customers – which is good news for you because that means it’s raining discounts! Research all the discounts and deals available to you in advance, especially if you are considering shopping online. You could be paying more on goods you generally purchase for the holidays due to inflation forcing the prices of numerous goods and services up, so be smart about your choices.
Make Some Extra Cash
While aiming to spend only from your savings, you should be careful not to spend all of it. One way to ensure you still have some money left in your bank account come the New Year is to make extra money to tide you through the holidays.
If you go through your belongings or check your house, you might come across several items you may not need anymore. By selling them online or through a yard sale, you can make a small profit that you can use for your holiday expenses. Another way to add to your bank account is by picking up extra hours at work or a side hustle for a few weeks.
Switch to Low Budget Gifts
You might be tempted to overspend when you want to purchase the perfect gift. Therefore, consider creative approaches to cut those expenses. Consider gift exchanges like White Elephant or Secret Santa, in which you only need to buy one gift for someone on a list. You can also gift your loved ones handmade trinkets, scrapbooks, or baked treats.
Use an App to Monitor Your Holiday Spending
Tracking your expenses when shopping at different stores can be tricky. Even the best-laid plans can go wrong when you’re preoccupied!
To help you keep track of your purchases, you can set up mobile alerts on your credit card app before you shop. Your bank or credit card company will send instant purchase notifications to your device, and you can monitor your transactions as you go along. A money management app that notifies you when you are coming close to your spending limit is also an excellent way to stay within budget.