As the economy prompts extra caution in spending, my goal this holiday season is to grant myself the peace of mind regarding finances. Though inflation has eased, I was aware that disappointment might still loom. What strategies can those on a budget employ to feel relaxed about money during this festive time?
We could certainly try practices like focusing on self-care. Still, even if I take a moment to meditate, my mind is likely to drift to the debt incurred from holiday shopping.
So, how can we relish the holiday season without stressing over the damage it may cause to our savings? Here are some tips I’ve gathered over the years that help me balance enjoyment with budgeting during this time. Think of it as my gift to all of you who are watching your wallets.
1. Be honest.
I genuinely enjoy searching for the perfect gifts. However, the anxiety of starting a new year already in the red can overshadow the joy of selecting thoughtful gifts for loved ones. Thus, before I embark on my shopping spree, I establish a reasonable budget for holiday gifts. (Pro tip: Honesty with yourself is crucial here.) Once I determine my budget, I jot it down on paper (preferably in ink). Having it in writing somehow alleviates the pressure, as I then have a clear idea of what I can genuinely spend.
As the primary earner in my household, I often find myself constrained to a minimal gift budget, which can be difficult to accept. Nevertheless, when I have a set amount defined, I am free to enjoy the shopping experience without overspending. There are occasions, however, when I exceed my limited funds and need to get creative. In a past holiday season, I even wrapped some cherished books from my own shelf as gifts. While this may appear overly frugal, each book was selected with care—resulting in a much more meaningful gift than something hurriedly bought during a shopping frenzy.
2. Remember, it’s December.
Think about making charitable donations instead of opting for tangible gifts. December is the final month of the year to donate to charities while being eligible for tax deductions, so you can afford to be altruistic. Plus, donations not only nourish your spirit but also help your budget. They can serve as a form of self-gifting when tax season rolls around in April.
There are additional deadlines in December that can benefit thrifty gift-givers. For parents, the deadline for contributing to a 529 plan is Dec. 31, so if your budget allows it, you can “gift” a student a bit more towards their education fund. Also, if you’ve been contributing to your workplace’s flexible spending account, don’t forget to stock up on eligible items like allergy medications from Amazon’s FSA-approved offerings, as most of these funds must be used by New Year’s Eve. For many years, I would submit my FSA reimbursements for December, effectively treating it as a “holiday bonus” to ease my seasonal expenses. While you can contribute to a Roth IRA until Tax Day, this is the time of year I often reach out to my employer about increasing contributions to retirement plans offered through work.
3. Increase your income.
Get a head start on spring cleaning and sell anything you no longer wish to keep. With various reselling platforms available, you can effortlessly host a virtual yard sale. If you have a talent for crafting, consider selling your creations at holiday markets or online. Furthermore, many businesses seek extra help during the holidays, so exploring part-time positions can bolster your income. You don’t need to dress as Santa, yet you might be astonished by how much financial freedom a bit of seasonal work can provide. Personally, I treat all extra income (along with credit card reward points) as “found money,” and I make it a point to use these funds on enjoyable experiences, such as theater or concert tickets, which I typically wouldn’t treat myself to due to my tight budget. Not only are these experiences enjoyable, but they are guilt-free, which is a gift in itself.
4. Try a dollar diet.
I’m not fond of the term diet, yet it fits well for this strategy. Like many, I find myself socializing during the holiday season instead of my usual couch-potato routine. Therefore, it makes sense to take a break from my streaming subscriptions. I do have a love for holiday movies—what’s December without a classic?—so I keep one active. If you, like many others, have multiple streaming services, decide to pause all but one for now. You can always reactivate them in the New Year.
Another strategy for all those gatherings you’ll attend: Purchase host gifts such as wine or candles in larger quantities—many retailers provide discounts for bulk purchases. Plan one major shopping excursion and save money while you attend all the festive celebrations.
5. Host the holiday party.
At first glance, hosting a party may not seem like a way to save money. However, when considering travel expenses, hosting can sometimes be the more economical choice. Even better, arrange it as a potluck or BYOB gathering, so everyone contributes to the food and drinks. Additionally, instead of exchanging expensive gifts, consider doing a grab bag of smaller presents (as opposed to the usual “Secret Santa”). It allows for a wonderful celebration with friends and family that won’t break the bank. Plus, it’s a great reminder that the holiday season is about gathering with loved ones rather than splurging on unnecessary items.
And remember above all else, the reason behind the season…
