How to NOT Overspend this Holiday Season

According to the most recent Gallup poll, 28% of Americans reported that they are planning to spend less on holiday gifts than they did in 2019. Predictions for 2020 show Americans spending an average of $805 on holiday shopping, a sharp decline from 2019’s estimation of $942.

With our country currently facing economically uncertain times as a result of the COVID-19 pandemic, there has been a drastic decline in spending in the last several months. Here are some tips on how you can avoid overspending this holiday season.

7 Money-Saving Tips During the Holidays Shopping

Make a Holiday Budget

A good place to start is to look back at what you spent last year to help determine where you can cut back this year. Begin with a list of holiday expenses, including food, gifts, cards, wrapping materials, travel expenses, and charitable donations. Next, you should determine how much money you have available to cover your holiday expenses—without using a credit card or taking out a loan—and who you plan on buying gifts for.

Once you have your maximum spending limit and list of loved ones finalized, you should divide the funds up among the recipients. The amount budgeted for each person might vary, and that’s okay; you shouldn’t feel pressured to spend the same amount of money on every person on your list. 

Establish Expectations Early

Don’t go overboard buying gifts to impress your loved ones. If you’re a parent, consider sitting down with your children and having an earnest conversation with them about the value of hard-earned money and the importance of making informed financial decisions, especially as they pertain to holiday spending during rocky economic times. 

By setting up expectations early, you’re avoiding the potential for kids who may be upset about the number of presents under the tree. More importantly, you’re paving a path for the next generation’s financial success.

Consider Going All Cash

The convenience of tracking spending online through debit transactions is unparalleled, but when it comes to sticking to your holiday budget, cash is king! For many people, the act of handing over physical money instead of just swiping a card at the register makes the spending feel more tangible and can be an easy way to keep your expenses in check.

Dave Ramsey’s envelope system offers an effective way to follow your budget by using cash because once your money runs out, there’s nothing left to spend.

Redeem Rewards

Credit cards can get you into trouble when it comes to overspending during the holidays, but that doesn’t mean they aren’t valuable. Credit card rewards are a great way to score discounts or earn cashback from places you plan on shopping at.

Review your credit cards’ reward policies to see if you can use any points you’ve accumulated throughout the year to offset some of your holiday expenses. If not, consider getting an early start on building up for the next holiday season by saving ahead!

Avoid the Impulse Buy

Even the best-laid plans can be derailed by the enticing impulse buys that seem to be everywhere this time of year, by sticking to your budget and list, you can avoid the drain on your bank account this holiday season. Shopping online and doing your research to compare prices is the simplest way to stay within your budget. Just beware of tricky e-commerce tactics designed to prompt impulse purchases.

Plan Your Shopping

Certain items such as TVs, electronics, and appliances have great deals on Black Friday and Cyber Monday. Waiting until December to purchase apparel and toys can help you save money since they have better sales on these products closer to the holidays. Those savings will add up and help you stick to your budget.  

DIY Gifts

Getting caught up in the moment of the holidays can be easy, but we forget the true joy of the holiday season is spending time with the people who matter most in our lives. Instead of overspending on pricey gifts that your loved ones may not remember by the time the next holiday rolls around, consider making a gift. Pinterest has lots of ideas if you need some inspiration. You may be surprised how much those DIY presents will be appreciated and valued compared to ones bought from the store.

Set Up Habits for Future Financial Success

While we all know saving money is a hard task during the holiday season, hopefully, these simple tips will help keep you within your budget and help you be financially ready for a new year.