Holiday spending survival tips from five financial pros

or Ryan Decker, surviving the holiday shopping season is all about planning ahead. In fact, if he finds a gift for one of his two sons in March, he will buy it first, instead of rushing through his shopping list in December.

“It eases the burden a lot,” he said, making his December bills more manageable because he spreads holiday expenses throughout the year.

Decker, a certified financial planner and director of the Center for Financial Literacy at North Central College in Naperville, Illinois, says that without that kind of planning ahead, expenses this time of year can easily that can beat budgets. “Inflation is eating away at our purchasing power, so once you throw in the holiday season, it’s a very stressful time.”

Financial gurus like Decker are always busy during the holiday shopping season, sharing tips with their audience on how to avoid debt and save money while still celebrating. We asked five of them how they personally navigated the time when their finances were on hold.

MAKE A LIST AND SPICK ON IT

“I know I’m going to set a budget so I don’t suffer after the holidays,” says Christine Whelan, clinical professor of consumer science at the University of Wisconsin-Madison. She makes a list of who she needs to buy gifts for and sets a spending limit for each person’s gift.

Part of that strategy means limiting purchases to what he can comfortably afford from savings instead of resorting to credit card debt, Whelan said. “One of the ways we can use our limited resources to maximize our happiness is to pay now, instead of getting socked with a credit card bill in February, which can damage our financial and emotional well-being.”

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GIVE (AND RECEIVE) ADDITIONAL GIFTS

Jerry Graham, Atlanta-based co-founder of the website KindaFrugal.com, mentioned to his brother that he wanted a handmade gift this year. “He is very talented in art and woodworking, I told him I would appreciate a cutting board or something. A DIY gift is more memorable and from the heart,” he said. It always saves money, too, and Graham knows his brother is on a budget.

Similarly, Felipe Arevalo, community outreach coordinator for the San Diego Financial Literacy Center, collects family photos throughout the year, then, when he sees a promo code pop up, creates a photo calendar for family members. “I got the idea from my wife’s uncle, but no one in my family had done it,” he said. Not only does this save money, but it also helps family members stay in touch and see how her sons, ages 4 and 9, are growing up.

The DIY strategy works for kids too. Whelan said: “I encourage my kids to give coupons for in-kind gifts instead of things. Kids can give a card for walking the dog or other errands, cooking dinner for the family , whether it’s pasta or babysitting. It trains kids to think about other people instead of just buying their way out of a gift.”

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THINK BEYOND THE FESTIVAL SEASON

The holiday season is the perfect time to make financial plans for the coming year, said Bruce McClary, spokesman for the National Foundation for Credit Counseling. “Today, I put forward a rough outline of financial goals and priorities for 2023,” he said. Focusing on things like travel plans or savings goals can help put holiday costs in perspective. “You can tune out a lot of sales-related ads and emails,” he says, and instead focus on what’s most important to you.

One of the biggest obstacles to achieving financial goals is debt, which can easily accumulate during the holiday season. In fact, the 2022 Holiday Shopping Report from NerdWallet found that nearly a third of last year’s holiday shoppers who used a credit card to buy gifts (31%) are still paying off their credit balances. card.

Given the current economic climate and rising interest rates, McClary says, “It’s probably a better idea than ever to avoid relying on loans and lines of credit to get through the holiday season, and be as be as conscious as possible of how you spend money. you have.”

WILL BEGIN IN JANUARY

Graham applies a similar approach to plan ahead as Decker, but with savings. “We put the money in starting in January,” he said. He and his wife Sara estimate holiday expenses based on the previous year’s spending, then divide by 12 and allocate that amount to a dedicated savings account each month using automated transfers.

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“By December, we will have enough money to cover holiday expenses, including decorations, food and gifts,” she said. This year is especially beneficial, as their income fluctuates due to job changes. Tracking your expenses this year will allow you to start this process first thing in 2023.

This column was provided by The Associated Press to the personal finance website NerdWallet. Kimberly Palmer is a personal finance expert at NerdWallet and author of “Smart Mom, Rich Mom.” Email: kpalmernerdwallet.com. Twitter: KimberlyPalmer.

RELATED LINK:

NerdWallet: 2022 holiday shopping report https://bit.ly/nerdwallet-holiday-shopping-report

METHOD:

This survey was conducted online within the US by The Harris Poll for NerdWallet from Sept. 15-19, 2022, among 2,075 US adults aged 18 and over, of which 1,751 plan to buy gifts this holiday season (2022 holiday shoppers). The sampling precision of Harris online polls is measured by using the Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.8 percentage points using the 95% confidence level.

“Holiday shoppers” refers to Americans who plan to buy any gifts during the 2022 holiday season. “Holiday period” refers to the period between Sept. 15 and at the end of 2022.

We used US Census Bureau population estimates and survey responses to calculate the total number of Americans planning to buy gifts this holiday season, as well as total gift spending and the total -gift spending charged to credit cards.

Source

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