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November 6, 2020

It’s time to start thinking about holiday finances

Like many people, you’re probably switching between wild excitement for the holidays and dread of having to navigate them during a pandemic. This year may look different in terms of holiday festivities, especially if you’ve lost your job or have been impacted by COVID-19. Trying to navigate this time of the year could be overwhelming. It helps to keep in mind that while there are many things that you can’t control, your finances are adaptable to your situation. Here are a few tips to keep in mind as we get closer to the holidays: 

Have a budget

We know, you’re probably tired of budgeting at this point. But when holidays are on the horizon, it helps to make an extra budget specifically for the holidays.

According to WalletJoy’s 2019 Holiday Wallet Woes Report, 18% of parents say their spending has “no limits” when it comes to their kids. And 13% say they’d max out their credit cards to give their kids the best holiday ever.

It’s easy to spend more than you originally intended, and there are so many unplanned one-time expenses. Take a look at last year’s spending to plan for this year; if you didn’t track your expenses for previous holiday seasons, make a plan for each of the following categories:

It may also be worthwhile to check in with your friends and family on this year’s gift ‘policy’. Even if you haven’t been impacted financially, your friends or family may be feeling pressured to spend more than they can spare. If you think it might be helpful, make a suggestion for ‘secret Santa’, a budget limit, or homemade presents instead.

Gift consumables or experiences instead of things

Your love for friends and family does not correlate directly to how much money you can spend on them. When buying gifts this holiday season, consider investing in consumables and experiences instead of things. For example: artisan chocolate, locally roasted coffee, fine cheeses or craft liquors from a local distillery. Something homemade, handmade or local will have a story and thoughtfulness behind it. We’re especially fond of local stores that let you buy products in bulk that you can then gift out in cute individual packaging.

Other ideas that work really well: pre-paid tickets to the art museum, ballet, mini-golf, spa-day or a reservation/gift card for a nice dinner. With small businesses struggling so much during the pandemic, a gift card for future use would benefit both the business and the receiver of the gift.

Don’t spend on extras that won’t bring you joy

It would be nice to have a whole new outfit for christmas or go all out with new decorations this year, but over the long run it’s not what we wear or how many holiday-themed knick-knacks we have that we end up remembering about the holidays. When purchasing something that has a singular use around holiday time, it might be worthwhile to question your own motives. In other words, be intentional about your spending.

Allocate spending for charity

It helps to keep the true spirit of the holidays in mind as you make plans and budgets this year. Make sure you have charity and donations as part of your holiday budget before the holiday shopping season gets underway. Also, don’t forget to check with your employer to see if they’ll match your contribution and consider gifts of appreciated stocks rather than cash if it fits your charitable goals and tax situation.

The groups you spend the holidays with may be struggling with their finances as much as you or more. Give them a chance to forgo buying gifts for you by organizing a group volunteer day instead. You’ll get to spend quality time together—plus, you’ll come out of the day feeling proud of your efforts rather than suffering from buyer’s remorse, and anyone can benefit from volunteering.

The Bottom Line

Don’t let your finances rob the fun from your holiday season. It’s easy to overspend and lose sight of the true spirit of the holidays if you’re not intentional about your spending. Instead, spend time with your friends and family (if you can travel and see them) and truly appreciate the opportunity to do so.

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