There is an unrealistic portrayal of how to create the perfect family holiday. Television advertisements, store displays, and seasonal movies promote the romantic version of the holidays. For example, movies foster the idea that homes require a giant Christmas tree reaching 20-foot ceilings, covered with expensive ornaments, lights, and presents under the tree. Every room contains carefully placed decorations, and every home emits the smell of fresh baked cookies and bread.
The reality can be very different and can include parents stressing about how to pay the bills, and how to afford their child’s most requested gifts. The illusion created by Hollywood and marketing firms creates an expensive season if you try to replicate the experience. Santa Clause may have an infinite bank account, but you do not.
Spending too much during the holidays can put you at a disadvantage at the start of a new year by creating financial setbacks, which can take months or years to recover. Instead of giving in to marketing enticements, use these tips to gain more control over holiday spending.
Set A Budget
Set a specific holiday budget that accounts for all seasonal costs, rather than only gifts. In addition to the cost of buying presents, consider how much you need for travel and lodging? What will you spend on food and entertaining, including decorations? Once you determine a specific dollar amount, review each aspect of the budget and find ways to cut back or receive discounts.
Ideally, you would start saving early for the extra costs involved. The earlier you begin, the less money you have to save each pay period to reach your goal. Start today and divide the amount needed by the number of weeks, and automatically put that money in a separate account earmarked for holiday spending.
Take advantage of the trend in online shopping to save time and money. It is easier to compare prices across companies and, when you place orders early, you can avoid shipping costs. Planning can also reduce out-of-stock items, which can require searching for alternatives. Remember, it takes longer to receive goods purchased online, especially when packages come from overseas.
Online shopping allows you to avoid the crowds and the emotional aspect of holiday shopping. You might also save money you would spend on a babysitter when you must physically visit stores.
Find Alternative Gifts
Purchasing presents often carry the highest expense in the holiday budget. To save money, consider alternatives such as handmade gifts, or utilizing Secret Santa.
Handmade items create personalized gifts, which can save money because you create something. Review your talents and find ways to express gratitude with existing skills. For example, cooking, sewing, music, or a flare with crafts enables you to give high-quality gifts on a shoestring budget.
Secret Santa can reduce the expectation to buy a gift for everyone. In some cases, families or a group of friends will draw names and buy one gift. At other times, everyone will bring a gift to an event and exchange through a round robin, turning gift giving into a game. It is best to set a price point to ensure gifts remain of similar monetary value.
Double Up on Savings
Combine sale prices with coupons or other discounts to stretch your dollar further. For example, you can purchase items on sale, use discount coupons or rebates found online, and receive cash back from the realtor for reaching their purchase threshold. Search for additional discounts ahead of time to find ways to double or triple dip on savings.
You could receive discounts and sale alerts by following the store on social media, signing up for their email promotions, or downloading their app on your phone.
The Gift of Giving
Creativity can save money while still giving something thoughtful to loved ones.
Contemplate giving neighbors, co-workers, and friends the gift of service rather than a purchased gift. In some cases, the service can benefit an entire family, eliminating the need to buy multiple gifts. Services might include mowing the lawn or raking leaves, cooking a meal, babysitting their children, or photographing the family. Children can create service coupon books for parents.
Make New Family Traditions
Christmas lists often contain items the person cannot get for themselves, which can lead to expensive requests. Instead of tapping your emergency fund to pay for extravagant gifts, come up with new family traditions which reduce requests.
Moving away from long gift lists, some families work on a service project together or give donations to the recipient’s favorite non-profit as a gift.
Consider Long-term Financial Goals
Long-term financial goals should not take the back seat during the holidays. It may be tempting to stop making contributions to a retirement or savings account, but doing so can significantly reduce balances over your working career.
There will always be financial pressures present, which pull you to spend money a certain way. Taking control over your finances can mean making hard decisions about where to direct limited funds.
For example, if you want to take an expensive vacation, rather than purchasing an expensive gift for your spouse, set aside additional money for the trip instead. You will save for something important, rather than spending funds on gifts that may not be satisfying a couple of months down the road.
You might also consider having friends or family members contribute to important long-term goals in lieu of gifts. For example, grandparents could add to a child’s 529, or buy an experience for an upcoming trip.
There are creative ways to enjoy the holidays that do not include over-spending. Awareness of your current finances and carefully allocating funds for the most important things will give you more control over spending, even with the external pressures to buy more.