Your Holiday 2023 Budget Guide, Part 3
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Watch my full YouTube video on this topic here.
Last year, Americans took on a record amount of holiday credit card debt, averaging $1,549 per household. And it gets worse: it took most people an average of 5 months to pay off their holiday-related credit card debt, leaving them with extra debt and stress well into the spring of 2023.
Keeping our credit cards paid off just keeps getting more challenging with inflated prices still around, especially for things like groceries and housing costs. You may be going into the holiday season with existing credit balances, only to keep adding to them with holiday shopping. Here’s Part 3 of your guide to preventing the holidays from becoming a debt gift that keeps on giving well into 2024!
1. Budget year-round for holiday shopping. If you really want to work ahead on this, set up a holiday line item in your monthly budget and contribute money to a dedicated savings account throughout the year. That way when you get to your holiday shopping, you won’t end up with a mountain of credit card debt come January. I wonder how much of the January blues most of us tend to experience are down to a) the fun of the holidays being over and b) all those credit card bills rolling in.
2. Set realistic expectations about gift-giving with your extended family. Be honest but tactful if you need to have conversations with loved ones about your need to budget more carefully this holiday season. You don’t need to go into detail about your financial situation, and your loved ones will most likely understand if your budget is a little tighter this year.
3. Consider scaling back on Christmas gifts for acquaintances. This might include coworkers, neighbors, people you know socially but not very well, etc. If you have a smaller-than-normal holiday budget to work with this year, you need to prioritize your immediate family and very close friends first. Otherwise, your budget can get spread too thin, and nobody gets anything particularly meaningful. The goal with gift-giving is to convey how special the other person is to you, after all. With acquaintances, you might be better off sending them a nice Christmas card this year, or taking them a homemade treat or gift. It can be challenging to find meaningful gifts for everyone in your life on a limited budget, thus adding to your holiday stress. Keep things simple, and prioritize your holiday spending on those closest to you.
4. Prioritize experiences over material gifts. Presents are only a small portion of what makes the holidays so special. Think back to your fondest childhood holiday memories. What makes them so special? If you’re having trouble with this exercise, or don’t have many good memories of the holidays (they can be painful and stressful for many people), you might enjoy Beth Kempton’s book A Calm Christmas, as well as her related seasonal holiday podcast. Some alternative ideas to gift exchange include planning a fun outing together, meeting up for a Christmas coffee or brunch, setting a low spending limit for the gifts you do exchange, giving homemade gifts, having a fun holiday movie night, and more! Use your creativity here and you just might find yourself creating fun new family memories without any presents at all.