The holidays can be a whimsical time filled with friends, family, food and festivity. But your wallet may feel the pinch. The average American consumer spent $1,143 on retail purchases alone during the holiday season of 2017 — an increase from the previous year. This figure doesn’t even factor in other expenses like travel and food.
If you’ve ever experienced a “holiday hangover” on your finances, you’re far from alone. Here are five tips for saving money this holiday season, meant to help you save your funds without sacrificing fun.
Use Cash Instead of Credit
Using credit to pay for holiday expenses and figuring you’ll pay off the balance later is a slippery slope. The last thing you want is to be paying off your holiday bills into next summer or beyond.
One potential remedy is buying with cash instead of credit. The key to making a so-called “cash diet” work is budgeting effectively in advance. Sit down with your expense tracker and figure out exactly how much you can afford to spend on the holidays based on your income and other expenditures. Then plan to withdraw a set amount each week in cash. If you exceed your allotted envelope of cash for the week, you’re done buying.
The idea behind a cash diet, in addition to limiting how much you’re able to spend, is to make you really feel the impact of each dollar spent.
Set a Gift Expense Limit
Worried about coming up with the money to buy everyone you know an extravagant gift? Try setting a gift expense limit. For instance, say your family does a gift exchange every year. Instead of trying to one-up each other with expensive presents, agree ahead of time to reasonable limit of, say, $20. This way all the gifts will remain the same reasonable ballpark and no one will feel undue expense of splurging on something pricey.
Touch base with friends, family members and coworkers ahead of time to see if they’ll agree to a limit on the cost of gifts. They may even be relieved that you brought up the idea first.
Shop from a List
It’s all too easy to get sidetracked when you’re shopping, whether you’re picking up gifts for the kiddos or ingredients for a holiday feast. Avoid setting foot inside stores without a thorough list. This will help you breeze past tempting impulse purchases and stick to only what you know you need.
Streamline Holiday Food Costs
Holiday food costs are another area in which things can quickly get out of hand. Once you total up the cost for the main dish, side dishes, desserts, snacks, seasonal treats and alcohol — well, you may be surprised at the final tab.
Here are some tips for reducing holiday food costs from Andrew Housser, co-founder of Freedom Debt Relief and all-around debt expert:
- Buy seasonal and local: Sticking to in-season and local foods can save you up to 15 percent. Around the holidays, take advantage of lower prices on cranberries, Brussels sprouts, citrus fruits, squash, sweet potatoes, pears and broccoli.
- Host a potluck: Ask guests to bring a favorite dish to pass at your holiday gathering. This will vary the food offerings and help you avoid having to spend tens or hundreds of dollars on multiple courses.
- Take stock of what you already have: Avoid doubling or tripling up on groceries by taking inventory of what you already have. You’ll likely be surprised by how many staples you’ve stocked up over the years.
- Create a budget per meal: If you’re planning several holiday meals, create an ingredient list and budget per meal. This will help you prioritize and anticipate expenses ahead of time instead of after the fact.
Reduce Your Travel Expenses
Last, but not least, optimize your holiday travel. Avoid flying on the Friday before Christmas if possible; this is the most expensive day of the entire year. Look for deals early and be willing to travel on more flexible dates if you can.
You want holiday memories to stick with you. But debt? Not so much. Try these five tips for saving money this season.