The first rule of getting out of debt is simple – stop adding to whatever debt you’ve already built up. It’s simple, but not necessarily easy at holiday time, when the urge to splurge can defeat your best intentions to be frugal. But cutting your holiday spending doesn’t mean you’ll be forced to scrimp when it comes to gift-giving.
Shoppers are expected to increase their holiday spending this year by 5 percent to 5.6 percent from 2017, according to consulting firm Deloitte’s 2018 retail holiday sales forecast, which covers the period from November 2018 to January 2019, for total average spending of $1,536 per household.
The interesting thing here is that the total covers everything from a wreath for the front door to the eggnog you’ll drink at home and even the plane tickets you might purchase to travel home for the holidays. The actual spending on gift purchases is about a third of the total amount – 34 percent, Deloitte says. That’s just $525 to purchase an average of 16 gifts, with gift cards (unfortunately) being the most popular item.
That’s an increase of $95 on gifts from last year’s total of $430 but, if that’s your intent, it’s OK: It still leaves more than $1,000 of spending you can consider cutting without reducing your gift spending by a penny.
Invest in experience instead of stuff
The biggest holiday spending category of all is categorized as “experiences,” which includes socializing away from home and entertaining at home, for a total of $611.
This is good news for two reasons: First, personal finance experts stress that at holiday time, it’s more valuable to invest in experiences with friends and family than in buying more stuff. Second, you can find lots of ways to economize here, such as changing your traditional holiday blow-out soiree into a potluck or a simple yuletide cocktail party.
Socializing can be moved to meeting friends for lunch rather than expensive drinks and dinner, or searching out cheaper options for travel. If you must fly home for the holidays, consider traveling for a belated or early holiday rather than at prime travel times, or take turns with other family members and have them travel to visit you every so often.
Re-use last year’s holiday decorations
The third highest holiday spending category of non-gift purchases totals $400, the survey found. The following is what Deloitte’s survey defines as non-gift purchases…
- Non-gift clothing
- Home and holiday furnishings
- Greeting cards
Again, if you have to scrimp, this can be an easy place to do it. Use or re-use your existing decorations rather than shelling out of a bunch of poinsettias that you’ll chuck before New Year’s Day. And take stock of what you already have on hand before running out to buy new stuff.
Do you really need a new light-up Rudolph The Red-Nosed Reindeer sweater? You can avoid pricey wrapping paper, bows, ribbons and paper goods with a trip to your local dollar store rather than paying top dollar at a card shop, grocery or party supply store.
Set a holiday budget
Plan your spending, too, even if it’s just quick notes jotted on a Post-It Note. When you set spending limits on your gift list, do the same with your holiday extras instead of blindly buying on impulse. And, like everything else, it pays to shop around for miscellaneous holiday goods just as much as for presents.
It defeats your purpose if you rushed out to grab a Black Friday gift bargain only to blow more than you saved when it comes to buying wrapping paper, tinsel and ornaments. Also, take cash when you go shopping – it limits you’re spending and you’ll spend less when you use “real money” instead of credit or debit cards.
Finally, if you really need to cut back this holiday season, be upfront with friends and family. If Santa’s broke, level with your family, since they most likely already sense that things are tight, and concentrate on what’s important to them. Your spouse and kids might prefer to scale back on the holidays if it means you can afford next year’s family vacation. Likewise, no real friend or relative wants a gift if they know it’s going to derail your finances for months to come.
The key is to consider ALL your holiday spending and make a plan and budget, from gift cards for the mail carrier to the stuffing for the roast goose. That way, you’ll be able to spend less without turning into a real Scrooge.
For tips on planning out your holiday spending, check out How to Make a Holiday Budget.
Brian J. O’Connor is the author of the award-winning budgeting book, “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”
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