Beating the Holiday Financial Blues

Holidays are often an exciting time of the year. Spending time with family, enjoying time off work, and celebrating with family traditions are enjoyable activities. However, the holidays can also represent added stress due to the crunch on your wallet.

It is hard to look forward to a holiday if you are worrying about how to pay for it. Have you stressed about how to provide a fun experience for children without breaking the bank? Decorations, gifts, and food expenses add up quickly.

When thinking about expensive holidays, people often think of Christmas. However, many other holidays can be expensive as well. For example, Halloween is the third most expensive holiday, after Christmas and Valentine’s Day. Although Halloween does not involve large gifts or family events, the costs of costumes, candy, and decorations can require big spending. To avoid this financial strain, it is important to plan for holiday expenses throughout the year and to adopt new, lower-cost traditions.

Develop a Budget for Upcoming Holidays

One way to reduce impulsive spending is to develop a budget that includes clear expectations for travel, food, entertainment, and gift-giving expenses.

• Make a list of everyone who will receive a gift as well as all items that will cost money during the holiday season. Some items often forgotten include gasoline, babysitter fees, eating at restaurants more often, and so on.
• Some people enjoy giving gifts to non-family members, but they are often forgotten when making a budget. These people include teachers, babysitters, hair stylists, etc. Consider writing handwritten notes expressing thanks or appreciation rather than buying gifts when possible to reduce your spending costs.
• Divide the list into necessary items (needs) and extra opportunities (wants). For example, gasoline is a needed expense for traveling while eating out at restaurants while on the road is an extra expense that can be avoided if needed. Dividing your list will help you save for all necessary expenses and provide a list of ideas in case extra money is left over.
• As part of your budget, determine how you will pay for each item. Paying with cash will help avoid unexpected spending. Paying with a credit card without keeping track of spending may cause you to forget purchases for which you’ll have to pay later. If paying with layaway, look out for hidden fees and be sure to budget for any interest added.
• Carry a copy of your budget with you, and be sure to follow it while in stores. Once a budget is made, it can still be hard to follow. In-store sales are tempting, but making impulsive purchases, no matter how small, can add up quickly.
• Plan your shopping trips ahead of time by reviewing store ads for upcoming sales. This step will lower costs while also helping to reduce impulsive decisions while in the store.

It can be helpful to budget for holidays that occur together. Several holidays occur during October, November, and December, leaving little time for budgeting. Combining holiday expenses for all three holidays together can make sure that you are not caught off guard.

Consider the following tips for upcoming holidays:

Thanksgiving

• Cooking an entire Thanksgiving meal on your own can be expensive. Consider having a potluck with friends and family to avoid cooking or paying for the entire meal yourself.
• Plan for meals ahead of time to take advantage of coupons and grocery deals. Coupons and advertisements about upcoming sales can be found online and in local newspapers.
• Using in-season produce for recipes can often reduce food costs. For example, sweet potatoes and fall squash are often on sale during the Thanksgiving season.
• Reduce travel expenses by visiting out-of-town families for one holiday during the winter season (such as just Thanksgiving or only Christmas, rather than both holidays).

Christmas and Hanukkah

• When making a budget, decide what you will spend on each person before going shopping.  If possible, talk with family members and friends to set a spending limit that everyone can spend on each gift.
• Consider setting up new holiday traditions that cost less. For example, some families or friend groups use “Secret Santa,” where each person draws a name randomly so that each person receives a gift and each person only buys a gift for one person
• Consider spending time together rather than gift-giving. Other ideas include a nice dinner out or playing games as a group.

By Laura M. Frey, LMFT, Ph.D. Candidate, Department of Family Sciences, University of Kentucky and Jennifer Hunter, Ph.D., University of Kentucky Family Finance Extension Specialist. From America Saves; americasaves.org