It’s beginning to look a lot like the holidays. Macy’s windows are decorated, Christmas trees are on sale, and yuletide carols are playing just about everywhere you go.
But there is one thing that’s a little different this year: the unwelcome presence of inflation. All of the gifts, food, decorations, and everything else you buy for the holidays will cost you more this year. A lot more.
When inflation rears its ugly head, it doesn’t take a holiday. In fact, it makes holidays more painful for our wallets. To help you fight this monster, here are nine holiday tips to help you keep more of your money (and your sanity) during the holidays.
- Set a spending limit
- Make a list, check it twice
- Give of yourself
- Just say "no"
- Make your own gifts & cards
- Buck the trend
- Start early
- Pay with cash
- Comparison shop
Hopefully, you’ve been keeping a budget and sticking to it all year long. But, if you haven’t, you can still set a holiday budget.
Your holiday budget is designed to set spending limits. Look at your checking and savings account balances and decide precisely how much you’re going to allocate to holiday spending, which includes gifts, wrapping paper, a tree and decorations, and anything else you wouldn’t have spent if it weren’t for the holidays.
Once you’ve arrived at a reasonable amount, pledge to yourself that you won’t spend a dollar over it. If you’re not confident you can do it, ask a friend to be an accountability partner and help you stay within your budget.
[ Related: What to know about. the 50/30/20 budget rule ]
Hopefully, everyone in your life has been more nice than naughty this year, but not everyone can be on your gift list.
Even though your uncle sends you a birthday card with $5 every year, that doesn’t mean he should be on your list because you feel obligated. And your cousin who you don’t see all year long but sends you knitted socks you never wear at Christmas — you don’t need to put her on the list either.
Outside of your immediate family, select a maximum of three people you will buy a gift this year. Being that gifts will cost you more than they did last year, you’re going to need to pare back the number of gifts this holiday season.
Maybe Uncle Albert and Cousin Kate, or other family and friends you rarely see, could use a visit instead of a gift. If you feel the need to bring them something when you knock on their door, bring a batch of homemade cookies (that you made from ingredients bought with coupons).
Sometimes we overspend during the holidays because we overextend ourselves. The more parties and events you attend, the more you’re going to spend. You may feel like it's mandatory to participate in the gift exchange at work, but it’s not. If you get terminated because you declined to play along, you aren’t going to have money problems when the lawsuit is settled.
Decline invitations to things you don’t want to go to or are beyond your budget. After they crack open the eggnog, whoever invited you won’t even realize you’re not there.
[ Inflation's Impact: 88% cut spending, while many worry about food & bills ]
Do you have a particular skill set you can put to work and make some of your own gifts this year? Perhaps you like woodcarving and can carve something personalized for your brother. Or maybe you have a knack for drawing or painting and can create something for your mom or dad.
And just about everyone likes to receive a personalized card. Instead of spending $8 on a store-bought card, make your own. It will cost considerably less and be treasured much more.
Unlike with investing, the trend is not your friend. For example, every year there are trendy toys that sell at premium prices (remember Beanie Babies and Cabbage Patch Kids?). Every year there’s a craze over something.
Resist buying the hot item. There are plenty of gifts you can give your athletically inclined nephew that cost a lot less than a pair of Air Jordans.
If you’re reading this and haven’t started your shopping yet, finish this article and then head to the store (brick-and-mortar or online). There’s a lot more inventory to choose from three weeks before the holiday than the day before.
And as you remember from your Econ class in school, the lower the supply and the greater the demand — the more you’ll be paying. Add in inflation, and you may be spending 50% more than you could have if you bought that gift a week ago.
Supply chain issues have wreaked havoc on retailers as much as builders and car dealerships. If they have fewer popular items to sell, the more they’re going to charge for them so they can turn a profit during this prime shopping season.
If you need a dose of discipline for your spending, cash is king. It’s too easy to overspend when you’re pulling out the plastic.
Withdraw only the amount of money you’ve committed to spending for the holidays. You’ll be much more likely to pass on that $180 sweater your best friend doesn’t need if you can’t afford it and you only have cash in your pocket.
If you’re like most consumers, you do your fair share of online shopping. Use a prepaid card you can buy at the grocery store for Amazon and other sites you frequent regularly. You’ll be much more likely to stick to your budget when the card hits $0 (just be sure your credit cards are locked up and out of reach).
If you’re out shopping, don’t hesitate to comparison shop while you’re in the store. Thinking of buying that saw for your brother, who’s committed to building that backyard shed this spring? Scan the barcode or enter the product name in your phone and check out pricing elsewhere. If you can find it for 10% less a mile down the road, buy it there.
And if you’re at home and shopping online, it’s easy to comparison shop. Maybe you love that scarf and gloves for your sister at Macy’s online store, but have you checked out Dillard’s website? They might have the same item for a lot less.
Enjoy your holidays with a lot less stress knowing that you won’t have a mountain of credit card bills waiting for you in January by following these tips.
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