Set a practical spending plan for a bright holiday season.
The holidays can create immense stress on your budget. The average family spends over $1,000 to make things merry and bright. Getting started early and setting a practical spending plan can help you learn how to survive the holidays with your finances (and sanity) intact.
Again, welcome everyone and thank you for joining this month’s webinar — 2021 Holiday Survival Guide: How to save during the holidays without looking like a Grinch.
Holiday $urvival Guide
The 2020 holiday season was unlike any other. It happened during a scary and depressing year on so many fronts: Our physical health, our mental health, and our financial health. So in many ways, this is a very important holiday season. It’s the first holiday when we can get back to normal. But do we really want to return to the old days? Or do we want to do better than that?
The year before the pandemic, the average American adult had run up a holiday spending debt of $1,325. That’s how much they owed by the end of the year just in holiday-related expenses.
What’s worse, almost 8 in 10 of those people couldn’t pay off that holiday debt by the end of January. Which means they were carrying big balances on their credit cards. And trust me, you definitely don’t want to do that. Why?
Because credit cards charge insanely high interest rates. In 2020, all the credit cards out there averaged almost 17 percent. That means some were lower — and many were higher. It’s not uncommon for people to pay 20 percent in interest. That means for every $5 they spend trying to pay off their cards, they’re giving $1 away to the credit card companies. Not a good deal.
Avoiding the post-holiday panic
You don’t have to run up big credit card balances to have a wonderful holiday season. You don’t need to scrimp on gifts, either. If you start planning right now, you can save hundreds of dollars without wasting a lot of time. Let’s review those right now, starting with a holiday spending plan. Let’s face it, no one LIKES creating a budget — especially for a pleasant task like showering everyone with gifts. But it’s crucial if you want to do holiday shopping right. So if your holiday spending plan is basically, “Oh no! What now?” then you need to buckle down. It’s not hard. In fact, it’s pretty simple.
The first step is making a list and checking it twice. Exactly WHO do you need to buy gifts for? Really put some thought into this, because you’re making a promise to yourself that this is it. You’re not buying anything more for anyone else. We’re not yet talking WHAT you’re going to buy these folks, just that you want to — or in the case of a boss, maybe need to.
The next step is figuring out how much to spend. Even now, we’re not talking about how much you’ll spend on EACH person. We’re looking for a total. Over the years, studies have consistently shown something interesting. In general, people who DON’T go deep into debt spend around one-and-a-half percent of their gross annual income on holiday spending.
We think even 1.5 percent of your gross annual income is too much to spend on one holiday season. But we also deal in reality here. So here’s how to figure out this important number. Simply take your annual salary and multiply it by 1.5 percent. So if you earn $40,000 a year, that’s a holiday budget of $600.
5 great gift-buying ideas
Now, I know what you’re thinking. If the national average for holiday spending is over $1,000, and you want me to spend less than that, how am I supposed to take care of everyone I care about without looking like a Scrooge? Well, we’re going to show you how right now.
Everyone knows you can score great deals online rather than in the store. But NOT everyone knows about these comparison-shopping tech tools. These websites and apps let you make a list of desired items, then tell you when the best deal is being offered. Most of the ones you see here are pegged to Amazon, but BayWatch monitors deals on eBay, while the Mac Index does the same for the sale of Apple products. You can find these price monitoring programs everywhere, and you don’t need to be tech savvy to take advantage of them. Try one or more and see if you save big.
Let’s talk for a moment about gifts you make yourself. These often get a bad rap, because some people think it’s just a cheap way out of buying expensive gifts. And they’re right! But these gifts can be amazing because they’re personal. So if you can knit a sweater or build a jewelry box, those will be treasured items. Don’t forget, your gift is one of many. So it’s not like your friends or family aren’t going to get lots of store-bought presents anyway. Why not make yours special?
What we’re talking about here won’t work for tech-conscious kids and young adults. But if you know older loved ones who need a new smartphone, tablet, laptop, or TV set, don’t buy the latest bleeding-edge model. In fact, older Americans might appreciate a previous generation of electronics that’s already been proven reliable. And really, it’s just as good. Meanwhile, you save hundreds.
If you can’t make a gift, you can probably assemble one. It’s usually much cheaper — and a lot more fun — to make your own gift baskets for friends and family you know well. Why? Because you know what they like, whether it’s their favorite brand of chocolate or their preferred coffee. Gift baskets don’t have to be about just food, either. You can assemble one for hair and skin care, incense and candles, and kitchen utensils. We’ve even seen one just for socks, because the gift-giver knew their friend loved to wear crazy socks to work.
This one is especially good for the kids. Have them give out personal coupons for cleaning the yard, shoveling snow, washing the car, and other chores that often require a lot of nagging. Instead of them begging you for cash to buy YOU gifts, you’ll save your money and teach them the value of not only a dollar, but also of work.
Likewise, you can sprinkle in such coupons for your kids, promising them a free trip for ice cream or one free pass on making their bed. Whatever will brighten their eyes doesn’t have to lighten your wallet!
4 ways to holiday save
Gift-giving isn’t the only big expense during the holidays. There are holiday parties, holiday decorations, holiday meals, and holiday travel. You can spend just as much on these categories. Or even more. So let’s review three simple ways to save.
We spoke earlier about getting the kids involved on the gift side. Now let’s talk about them helping on the spending side. Any parent knows that kids are VERY interested in buying things, but they’re not so interested saving money. The holidays are the one time of year when your children might be motivated to think about budgeting.
Kids love holiday parties and trips, so show them the budget and ask for their input. How would you spend this limited amount of money on a party? Or on travel? Not only can you save a few bucks, you’ll be teaching your children lessons that are literally invaluable.
The holidays aren’t just about gifts. They’re about family gatherings and big parties. These can get pricey just on their own. Instead of spending money on expensive meals or trips, try saving money by doing activities that can bring you closer together as a family. Here are just a few that involve doing things together. Among our favorites are touring the neighborhood lights at night and baking holiday treats together. But all of them on this list cost little to nothing, but the memories will be priceless.
Ok, we just talked about how to save on family gatherings. But what about friends and coworkers? If you’re hosting a holiday party, why spend big bucks on food and decorations for a dozen or more people? A potluck is an inexpensive solution that doesn’t feel cheap.
For starters, promote it as a way to learn more about the people you work with or hang out with. Their food choices can be fascinating, especially if they bring ethnic dishes. Along those lines, a potluck makes it easier for vegans, vegetarians, and pescatarians to have something to eat, because they’ll bring something that fits their own dietary restrictions. Same with those who keep kosher and halal. Finally, if you have friends and coworkers who can’t cook, they can bring the holiday decorations and drinks.
We’ve talked a lot today about embracing technology, but anyone who’s tried booking a flight online for a holiday trip knows how overwhelming it can be. There are so many options, and they all cost something different on different airlines. Your best bet is to use fare-monitoring programs like Hopper, Skyscanner, Airfarewatchdog, and any of their competitors. They all do the same thing: They let you enter in where you want to go and when you want to go there. Then they keep checking for the lowest-priced options. We all know airlines keep tweaking their fares on an almost daily basis. These programs keep you up on those price fluctuations.
You can also go low-tech and call a human being. Travel agents still exist, and they can save you money on big parties traveling at peak times — which is the very definition of holiday travel.
Make money while spending it
Now let’s discuss a dangerous but lucrative tactic. We all know credit cards offer rewards points. And we all know that holiday shopping time is when you can really rack up those points. But here’s the problem: We often chase the points without thinking about the consequences. After all, what good are 10,000 points worth $100 if you carry a $1,000 balance at 20 percent interest?
If you can pay your credit card bills in full, then points become profit. But that sounds easy, right? What if you already have steep balances, and the holidays will just make them worse? Then you need professional help. FREE professional help.
One of the best-kept secrets in this country is the existence of nonprofit credit counseling agencies. These agencies hired certified credit counselors who can, over the phone, review all your finances and make concrete suggestions for getting out of debt and saving more money. That advice will come in real handy for the holidays.
Credit counseling: a free gift all year long
If you need help finding a certified credit counselor, we can help. Simply call the number that is showing on your screen 1-800-210-3481. Or you can send any questions you have about credit counseling to [email protected]
Charity done right
It might seem odd to conclude our lessons about saving money during the holidays with some advice for giving it away. But believe it or not, donating to charity can make you richer. And we’re not just talking about in spirit.
For starters, I’m sure you’ve heard about making tax-deductible donations. Like everything with taxes, it’s not as simple as it sounds. But yes, if you donate to charities that are properly designated by the IRS, you can save on your annual tax bill. But how do you choose a qualified charity? And how can you avoid getting ripped off?
This best place to start. Charity Navigator rates charities by their financial health, their accountability, and their transparency. Practically speaking, that means these charities really help people, and they do it by not spending a lot on overhead. Charity Navigator is free to use, and I encourage you to not only look up charities you already know, but also use the search function to discover reputable charities you might not have ever heard of.
We urge you to NEVER reply to email or phone solicitations for holiday giving until you check out a site like Charity Navigator. Sadly, this is also the season for scammers, too.
So that’s our quick holiday run-down for this holiday season. Thank you. And I want to leave you with this: Consolidated Credit may be able to help you save money and get out of debt faster than you can own on your own. Our licensed and trained credit counselors will provide you with a free budget analysis. We work with your creditors to lower your interest rates and eliminate fees. We can consolidate your credit card debt into one low monthly payment.
Again call the number on your screen 1-800-210-3481 to speak with a certified credit counselor and start your path to getting out of debt today. Or you can simply visit our website at www.consolidatedcredit.org. Tell us a little about yourself and one of our counselors will give you a call. If you have any questions after this webinar has ended, simply send any questions you may have. And one of your trained professionals will get back with you. Thank you for your time today. Thank you for joining us. May this holiday season be merry and bright. Until next month’s webinar everyone be safe and be well. Thank you for joining us and take care.
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