Whether you host a Thanksgiving dinner, participate in a Christmas gift-exchange, or raise a glass to the New Year, there are many occasions to celebrate and get together with friends and family as the year draws to a close.
As you plan and prepare for this year’s special get-togethers, it’s a good time to review your holiday budget. Do you know how much you spent celebrating the holidays last year? Research indicates that the average person spends around $1,000 during the holidays. In 2022, overall holiday spending in the U.S. was more than $950 billion. Your portion of this amount of holiday spending can quickly derail your family’s annual budget and cause you to start off the new year encumbered with new debt.
This year, take the time before the holidays to determine where you are with your financial goals. Ask yourself if you’ve met your objectives for this year and what you want to accomplish financially in 2024.
Unless you have already budgeted for holiday gifts and celebrations, and have created a discretionary fund to finance them, you can easily get yourself into a financial crunch at this time of year. To help keep your holiday spending manageable and finances healthy, here are a few tips and resources:
- Take an honest look at your budget to see what you can afford. Plan your shopping list accordingly. Don’t succumb to your desire to fulfill others’ gift requests if you cannot genuinely afford to do so.
- Create a reasonable holiday budget (read 10 Tips to Budget for Holiday Spending This Year). Define “reasonable” according to your income, and the people you would like to give gifts to this holiday season.
- Prepare a list of family and friends to help you come up with specific gift ideas for them.
- Set a strict spending limit (read 6 Tips For Sticking to Your Holiday Budget) and stick to it. Remain mindful of your year-long savings and spending strategy, and balance that with your holiday spending among friends and family, and event to event.
- Look for savings and deals by shopping sales and online price comparisons. Taking time to review all of your options before you buy won’t change the recipient’s response to your gifts.
- Prioritize your various holiday spending on events and activities. For example, plan to host Thanksgiving instead of going out to celebrate on New Year’s Eve. Or buy gifts for your immediate family only and send holiday cards to everyone else.
It can be challenging to control your holiday spending when stores are putting on massive sales and encouraging you to buy the latest version of technology, fashion, and toys for those you love. An alternative way to share the holiday spirit with those people can be to shift your focus to spending time with, and not money on, them. This may help you achieve your budget goals and create special memories — no matter what your current level of financial independence is. Remember, one of the best gifts you can give yourself and your family is financial stability.