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As the largest gift-giving holiday, the final months of the year account for nearly 20 percent of total annual retail sales for retailers—making it the costliest season of the year for shoppers. This is not surprising. What is surprising is how much more money we spend during this season than any other. For example, shoppers spent $600 billion during the Christmas season last year in 2018. The next highest seasonal total was the “Back to School” shopping season at $72 billion. In other words, on average, Americans spend 9X the amount of money retail shopping during the Christmas season than any other season of the year. Unfortunately, however, when the calendar turns to January, the negative effects of this spending begin to set in: higher-than-expected credit card bills, tighter finances than imagined, increased stress, and regret over the amount of money spent. So how can we avoid this January stress and regret? What steps can we take to avoid overspending during the holiday season?
Before the holiday shopping season even begins, decide how much money you want to spend. Think thoroughly through all the different aspects of holiday shopping: gifts, travel, food, decorations. Divide your budget into different categories: how much do you want to spend on gifts? How much will the travel cost? How many special events are on your calendar and how much will they cost? If the numbers aren’t lining up, what changes and/or sacrifices do you need to make? This way, you have a cap to stop the money juice from overflowing outside the bottle.
However, if merely creating a budget was the only thing needed to keep us within our spending limits, we’d be all set—not just for the holidays, but for life. Unfortunately, this is rarely the case. Even with budgets firmly established, many of us overspend. One reason this happens is because retail stores are shockingly good at getting us to part with our money. Loyalty cards, retail credit, decoy pricing, constant sales—all of these are tricks that retail stores use to get us to get our money. Be on the lookout for them, especially during this time of year. Don’t let marketing gimmicks fool you out of your money.
You also need to look out for minor convenience expenses. They are some of the most hidden costs of the holiday season. The holiday season throws us out of our usual rhythm by adding extra responsibilities and activities. As a result, the price we are willing to pay for convenience begins to rise. For example, sometimes, it is just easier to order fast food when running late for an appointment rather than a home-cooked meal. In addition, all of the time spent shopping often leads to other unnecessary purchases: expensive coffee drinks, pretzels, and smoothies, just to name a few. These expenses appear small. But over a month, they add up quickly. Just imagine buying expensive Starbucks coffee every day for a month. The total cost of that is a whopping $230! On just a cup of coffee! See what I mean about how dangerous convenience expenses are?
One last tip that I have is to track your spending. Not only should this apply to exclusively the holiday but rather it is wise to track your spending throughout the year. If you have set a thoughtful budget, it is important to stick to it by tracking how close you are to surpassing it. Because of all the extra shopping during November and December, I cannot stress it enough how important it is to track where your money goes. You don’t need any fancy subscription software to help do it for you, but rather, this task can be accomplished using simple pen and paper. At the end of each day, add up the money spent and compare the sum with the total budget that you have created divided by 30. If it’s more, then you’ll need to cut spending the next day. If it’s less, the next day, you could treat yourself to a coffee. You get the idea.
Not overspending during the holiday may not be easy. It is really difficult and a lot more work. It certainly requires a lot more time and effort than buying whatever you like. But at the end of the day, it’ll benefit you in the long run. Your future self would be proud of you for saving them money.
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