The culture of marketing ads, family events, and holiday gifts can make some people feel like it’s impossible not to spend money or end up spending too much. His 2023 study from NerdWallet found that nearly half (52%) of Americans incurred credit card debt from buying gifts during last year’s holiday period, and nearly one-third of them (31%) ) has not yet been repaid.
While it may be honorable to donate, consider setting boundaries when it comes to lending, borrowing, and spending money during the holidays.
Step 1: Set your money goals for 2024
Without a good reason, it can be difficult to cut back on spending during the holidays. To avoid becoming myopic while spending, start the process of planning your 2024 financial goals. For example, if you want to make higher student loan payments or save up for a down payment on a new car next year, overspending during the holidays could be a setback.
“Be brutally honest about your financial commitments for January and February,” says Yvette Marie, a clinical social worker in Princeton, New Jersey, who helps clients with their financial health.
By starting your 2024 budget now, you can avoid unnecessary debt and regrets in the new year.
Step 2: Practice saying no to requests.
Prices are high, and there may be many requests to borrow money during this period. You may feel obligated to play Santa and hand out cash to everyone who asks, but you could find yourself in a financial bind come the new year.
“Too often, when we do what others want, we end up in situations that aren’t actually in the best interest of ourselves, our families, or our mental health.” Marie says.
Be prepared to say no when you receive a request that is beyond your capabilities. For those unfamiliar with the word “no,” Tracy Williams, a licensed financial therapist and psychologist in Atlanta, Georgia, provides an example of how to say no.
“You could say something like, ‘Thank you so much for thinking of me when you were planning this.’ I can’t because it’s out of my budget,” Williams says. “Something simple and short like this helps maintain relationships.”
Consider including a “loan bucket” in your budget. This consists of an amount that does not disrupt household finances. You can also insist on only lending an amount that you can afford to not have to pay back.
Step 3: Understand that it’s okay to feel guilty.
Saying no to a request for money, a trip to see family, or buying an expensive gift for your partner can create feelings of guilt. When we say “no,” we may feel guilty because of expectations from ourselves, our families, and society, Williams says.
“If you can focus on what’s actually important to you, your actual values, and stick to them, you’re less likely to feel guilty,” she says. .
To deal with these difficult emotions, Williams suggests first identifying them.
“Many people feel something but don’t realize what their actual feelings are,” she says. Once you name that emotion, you can counter it by emphasizing why you made that decision, she added. For example, if you have to say no to buying presents this year, remember the importance of building financial security for yourself.
Step 4: Explore your motivations for holiday spending
Many of our money habits, even when we’re on vacation, can be driven by subconscious beliefs and motivations. To understand why you make certain financial decisions, Murray suggests asking yourself what motivates you to lend or spend money to someone.
“Am I trying to right a wrong? Am I trying to fulfill a desire I had as a child? Ask yourself, ‘Why would I make such a decision?'” she says.
Understanding your spending motivations can help you strengthen your boundaries and establish new money beliefs that are rooted in the values you want to emulate. For example, if your parents taught you that the best way to show love is through gifts, and you find yourself spending too much money on gifts, it might be better for you to give intangible gifts like time and love. You may decide it’s important.
Step 5: Remember that holiday pressure is normal
Holiday pressures are real and can push you over budget. Recognizing that holiday pressure is normal can help you stay focused and on budget. Williams says he should remember that he doesn’t have to do everything, and that it’s unrealistic to expect that of himself.
“Recognizing that the pressure is there and that marketing has a role to play is a reminder to stick to your goals,” she says.
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This column was provided to The Associated Press by personal finance site NerdWallet. Elizabeth Ayoola is a writer at NerdWallet. Her email: eayoola@nerdwallet.com.
Related Links:
NerdWallet: Get ready for shopping season by managing your spending and debt https://bit.ly/nerdwallet-manage-spending-and-debt
methodology
The NerdWallet survey was conducted online in the United States by Harris Poll on behalf of NerdWallet from August 17-21, 2023 among 2,069 U.S. adults 18 and older, 1,762 of whom surveyed this holiday I plan to purchase gifts for the season. The sampling precision of the Harris Online Poll is measured using Bayesian confidence intervals. In this study, the accuracy of the sample data is within +/- 2.7 percentage points using a 95% confidence level.
“Holiday Season” refers to the period from August 17th to the end of 2023.
Using U.S. Census population estimates and survey responses, we calculate the total number of Americans who plan to buy gifts this holiday season, the total gift spending, and the total gift spending that will be charged to your credit card. did.
