Written by Tiffany Curtis
Don’t wait. Start planning your spending now.
This article is reprinted with permission from NerdWallet.
Retailers are once again trying to grab consumer attention with big fall sales, similar to Amazon’s (AMZN) second Prime Day sale. A longer holiday shopping season can spread out your spending, but it can also lead to overspending.
Danesa Do, founder of financial education company Money & Mimosa, said in an email that many of us show love by buying gifts for our loved ones or spending money on travel, so this is a time when planning It’s easier to borrow money from outside.” With the people you love. ”
NerdWallet’s 2023 Holiday Shopping Report backs that up. 52% of Americans incurred credit card debt from last year’s holiday shopping, and 31% of them still carry a balance. Survey results show that nearly two in five (39%) 2023 holiday shoppers feel pressured to spend more on gift purchases than they can afford to spend this year. 12% of 2020 holiday shoppers say they are likely to use some of their emergency savings. To buy a present.
See also: Shoppers will spend more than ever on holiday gifts online. But here they might cut down to make it work.
Whether you’re dealing with debt or trying to avoid debt, here are some strategies that can help.
1. Create a spending plan
Before you make any expenditures, take a close look at your finances and figure out how much you can afford for gifts and other expenses. This will help you avoid financial shocks later on.
“Planning your spending before the holidays can help you avoid waking up with a financial hangover on New Year’s Day,” says Do. “Your plan can include a list of everyone you want to buy presents for, as well as an estimate of travel costs if you’re visiting a loved one.”
2. Set financial boundaries
Financial boundaries are limits you set to protect your money. Boundaries are especially helpful during the holidays when you’re dealing with spending pressures.
“Your financial limitations may mean you don’t participate in the gift because you have other priorities with money,” Dou said. “Maybe you’re saving up to buy a house, paying off debt, or starting a business.”
Before you get carried away with holiday shopping, set some boundaries. For example, you can set a rule to wait at least one day to complete online purchases.
“Mindfulness is the key to protecting your financial boundaries,” Celia Hughes, a certified financial therapist, said in an email. She suggested shopping online and keeping items in her cart for at least 24 hours. “Please come back and see if you still want to buy.”
“By slowing down your decision-making, you can control your boundaries,” Hughes says. “When you’re shopping at the store, take pictures of what you want to buy, then go home and sleep.”
3. Spend time instead of money
Money is a source of stress for many people during the holidays. By prioritizing experiences and relationships, you can shift your focus away from spending and take the worry out of you, your family, and your friends.
“My advice to everyone, even if you’re in a healthy financial situation, is to spend your holidays focused on experiences and relationships,” Hughes said. “Moving away from extreme consumerism may feel like a leap, but if your loved ones remember the time you spent together and the time they spent with you, it becomes easier to become the norm. Masu.”
Plus: Be especially wary of credit card fraud during the holiday season.
4. Choose low-cost gifts
Choosing to focus on low-cost gifts is also another way to capture the festive spirit without deepening debt or adding financial stress.
“For example, instead of buying each other gifts, you could exchange handwritten thank you notes,” Dou says. “If you’re feeling artistic, give DIY gifts like candles, hand-painted cards, fresh spice aromatics in mason jars, ornaments, candle holders, and homemade jam.”
If you still want to experience holiday shopping, Hughes suggests: “Think of a gift exchange. Each person secretly draws the name of another family member, sets a low spending amount, and sets the task of finding something that reminds them of their own memories.” Tokoro.”
You may also like: 7 more ways to save money you may not have thought of
5. Use cash
Using cash instead of cards may allow you to be more careful with your spending, especially during sales.
When using credit cards, Dou says, “It’s very easy to swipe your card and forget about it, but if you need to withdraw cash, you’re less likely to spend money impulsively.” says.
Read: Credit card bills and student loan payments: If it’s too much, consider these options
6. Create a debt repayment plan
Setting a spending plan and limits can help keep your holiday expenses in check, so consider giving yourself the gift of lowering your balance by using those savings to pay off your debt.
If you need inspiration to keep it going, try the debt snowball method. Focus that extra money on your smallest debts first (while continuing to make at least minimum payments on your other debts). Since we start small, the time it takes to see results is short. Once you pay off your debt, you turn to the next big company.
Or, if you’re worried about interest costs, try the debt avalanche method. This strategy focuses on debts with the highest interest rates first.
Debt consolidation also allows you to consolidate multiple debts into one payment, ideally at a lower interest rate. If you have good credit, you may want to consider a 0% interest balance transfer credit card or debt consolidation loan.
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Tiffany Curtis writes for NerdWallet. Email: firstname.lastname@example.org.
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