According to the National Retail Federation, the typical American plans to spend at least $804 on the holidays (data from 2014). Those in other countries also devote substantial money to this time of year which often revolves around gift giving, hosting parties, expensive travel and sharing. However, each year people go into debt shopping for year-end holiday expenses that they end up paying off for several months.
Fortunately, there are some simple steps you can take to cut down on the financial impact of the holidays. The following 5 tips allow you to enjoy the holidays to their fullest, while also cutting down on unnecessary or frivolous expenses.
Plan for a stay-cation
Who says you have to go on a vacation each holiday season? You can save a lot of money and create a new tradition by staying home instead. There are probably wonderful holiday events, activities and local sights and sounds worth seeing right in your local area. Plan for a stay-cation instead of a vacation to save some serious holiday cash.
Spread your expenses out
You can look at this from 2 angles:
1. Each month budget some money that you will use for holiday expenses. Then use that money at the end of the year when you shop for decorations, gifts and other holiday items.
2. Make holiday-based purchases throughout the year.
Either way, this strategy eases the impact on your pocketbook or purse during the holidays.
Make gifts rather than purchasing them
This is a tradition in our family. We make at least one gift for those on our list. It does not have to be fancy – special cookies are my favourite. When you teach your children to hand make gifts instead of buying them, you teach the real meaning of the holidays. This also promotes creativity, imagination and other important life skills.
Gifts mean so much more when they are heartfelt creations rather than retail store purchases.
Limit the number of gifts each person gives
If gift-giving is a part of your holiday celebration, do you really need to give multiple gifts to multiple people? Giving just 1 gift per person keeps your holidays from devolving into nothing more than a “what am I getting this year” mindset.
Draw names instead of giving to everyone in the family
We have done this for years in our family and it works really well. While we do not actually draw names, one of us is the “keeper of the list” and arranges who buys for whom so that we don’t get the same person year after year. We also have a maximum amount that we spend on gifts for that person.
I hope you get some ideas from this as to how you can cut back on your holiday spending.