Holiday Spending - hangover

The holidays can be a wonderful time of year. There is nothing quite like the bright lights and cheerful music to put you in the gift buying mood, but it can also be a stressful time financially and that stress can last well into the new year.

According to the National Retail Federation, American consumers will spend an average of $940 on holiday shopping this year and more than 37% will fund their Holiday shopping using credit cards.  Given that these are just averages, I’m guessing there will be many of us out there who will spend much more.

But that holly jolly holiday feeling can quickly disappear once January rolls around, and you open your credit card statements. In order to avoid a holiday spending hangover, try following these money saving tips.

Holiday Spending - woman with laptop and credit card
Create a Budget

Creating a holiday budget begins with making a list of all the gifts, food and decorations you’ll need to buy. You might also want to include other items like travel costs if you plan to visit relatives. You can download free holiday budget templates online to help you get organized.

You should also look for ways to cut costs on gifts such as looking for deals on websites like Living Social or Groupon. You could shop on Black Friday, if you’re brave enough to face the crowds, or wait until Cyber Monday to shop for presents online. If you have several extended family members to buy for, suggest a Secret Santa gift exchange so that you only need to buy one gift.

Once you have determined how much you’re going to spend on holiday shopping, you need to decide if you have enough to cover the costs, and set aside the cash in a separate account. Keeping the money separated will make it easier to keep track of how much you’ve spent and how much you have left.

Whatever you do, just say no to credit card debt. Leave your credit cards at home when you go shopping. Some of the easiest things to cut from your budget are holiday decorations (what you used last year will work just fine) and splurging on items for yourself even though it’s easy to get tempted by a sale.

Holiday Spending - holiday decorations

Avoid Social Media Pressure

If you’ve ever seen the movie “Christmas with the Kranks,” you can probably relate, on some level, to the characters’ desire to opt out of Christmas in order to avoid the stress, pressure and nearly $6,000 they spend each year on the holidays. Their neighbor, meanwhile, decides to organize a campaign to force the couple to decorate their home so the neighborhood can win a contest. While most of us aren’t dealing with pressure to that extreme, many of us feel subconsciously pressured to “keep up with the Joneses” every time we open our Facebook, Pinterest or other social media account.

A survey conducted by the American Institute of CPAs found that 1 out of every 4 adults with a social media account were “left feeling envious after seeing someone posting about a purchase or vacation.” The survey also found that over 20% of adults were likely to make a purchase based on how family and friends would view it.

Take a minute to step back and analyze how others’ opinions may be impacting your holiday preparations. Also, remind yourself that what you see online may not be real, and that the grass isn’t always greener on the other side. Limit the time you spend on social media accounts, and limit the amount of information that you share. Instead, focus on what really matters to you and your family, and even consider volunteering to give back to those who are less fortunate. Multiple studies have shown that giving back helps us to feel happier and more appreciative of what we have.

Holiday Spending - woman taking selfie of feet in christmas socks

Automate Your Holiday Savings

It may be late to build a holiday savings fund for this year, but it’s never too early to start saving for future years. The first step is to open a separate savings account, which will make it easier to track. The next step is to make it simple and as painless as possible to save.

Most banks will allow you to set up automatic transfers from your checking account to your savings account. You could set up an amount that is comfortable for you such as $25 every other week. There are also plenty of money-saving apps that can make saving feel easy such as Digit. Digit analyzes the way you spend money. It then transfers a few dollars here and there into savings based on what you can afford. Their commitment is to help you “save money, without even thinking about it.”

If you would prefer to stay away from fancy apps, big banks are also coming up with creative options. Bank of America, for example, has a “Keep the Change” savings program that will round up your purchases to the next dollar and save the extra change. A coffee purchase of $3.25 would be rounded up to $4, and $0.75 would go into your savings account.

Holiday Spending - money and gift

Allow Yourself to Say No

The holidays are supposed to bring out the best in us. It’s a time for generosity, and a chance to reflect on the year past as we prepare for the year ahead. If we stretch ourselves too thin both emotionally and financially, the season will become a source of stress. Don’t be afraid to opt out of some events and gift exchanges. Remember how this time of year felt when you were a child, and try to reclaim some of that magical holiday feeling!

Holiday Spending - child in snow