If the past couple of years have taught us anything, it’s to plan for the things we can and be resilient about the unexpected. As consumers, we’ve learned to navigate holidays a bit differently, including the way we shop, manage a family budget, and even experience special moments with our loved ones (who would have anticipated having a holiday Zoom call with a favorite aunt rather than tasting her cheesy potatoes in person?).
This year’s holidays are exciting as we begin to move toward a new normal of re-engaging socially; however, the aftermath of the COVID-19 pandemic still lingers. Family incomes may have changed, and current inflation issues and related supply chain concerns may bring feelings of anxiety as we think about the holidays.
One of the best ways to reduce financial stress, during the holidays or any other time of year, is to begin with a plan — which can make it easier to manage the unexpected. Here are seven tips to help make your 2021 holidays memorable without putting yourself into poor financial shape:
1. Decide how much you can spend and stick to it.
Set a spending budget, being careful not to overlook the little extras that always tend to sneak up on us. Include everything from postage for cards to holiday party favors and home decorations to the cost of boarding a pet if you’re traveling. To give an accurate picture of your spending, look at last year’s expenses by reviewing previous credit card statements. If last year was an anomaly (which might be putting it lightly), then look at the previous year’s statements.
You can also make a conscious decision to spend less. According to bankrate.com, the average anticipated cost of this year’s holidays is nearly $1,000. That amount is anticipated to include costs associated with family, co-workers and friends, along with entertainment. Your spending plan may be above or below that mark, but when in doubt, it’s an amount you may consider as a starting point.
2. Make a list and check it twice.
Once you have your budget set, then determine how much you can spend on each person. Don’t be afraid to shorten the list of gift recipients or the amount spent per person. You may need to challenge yourself to be a little more creative on ideas, which can be part of the fun. For big families, consider having everyone draw names and only buy gifts for the person they pick. For co-workers, consider a different way to celebrate – such as a 5:01 Zoom call with creative holiday game or team-building exercise!
3. When possible, pay cash.
The best possible way to do this is by being prepared. At Advia CU, we offer holiday savings accounts that members can direct small deposits into every payday. Over time, the balance adds up, making it perfect for use at the holidays. If needed, use credit cards responsibly. Ideally, you’ll want to pay everything off as quickly as possible (or at least before the next holiday season rolls around). Have a choice of cards? If you’re one to pay your balance in full each month, take advantage of rewards card benefits! But if you tend to carry a balance from month-to-moth, then you may want to consider the card that offers the lowest interest rate. Remember to track everything you spend and stick to your budget.
If you are considering a large purchase around the holidays that you know has lasting power, consider a low-rate, quick repayment term loan. These usually come with special promotional rates around the holidays. Or, if you’re using this special season to consider an upgrade to your kitchen or another home improvement, maybe a home equity line of credit is a way to go. This valuable line of credit is tied to the cash equity you’ve built in your home (which most likely has a much higher value these days due to current economic conditions), can be accessed at a lower rate than other types of loans, and may also offer some tax time benefits associated with the interest paid.
4. Don’t wait until the last minute.
In a perfect world, we start looking for sales well ahead of time, and even buy “off season” for a birthday or anniversary that might be months in the future. This year, given the significant delays in anticipated delivery due to unprecedented supply chain concerns, it’s important to purchase gifts as early as possible while also being thoughtful about what you purchase. Consider shopping domestically (or even better, locally) to avoid overseas shipping and potential delivery delays. If shopping online, consider larger sellers like Amazon or Walmart, which charter their own container ships, according to a recent Business Insider report. Also, review the shipping deadline dates provided by popular delivery channels such as FedEx, UPS, and the USPS to stay in the know and avoid paying exorbitant rates to ensure delivery before the holidays.
5. Don’t overlook the value of intangibles.
Do you want to give someone a gift but don’t have the money? Consider making a special meal or treat. Even the ingredients and copy of your own special recipe would be a very thoughtful gift!
6. Consider electronic gift cards.
Electronic gift cards, which can be used online or in stores, can be a thoughtful and budget-friendly gift. Thanks to the Card Act of 2009, they do not expire, and many retailers offer cards in a range of dollar values that fit into budgets large or small. As with any other type of online shopping, electronic gift cards do have some small risks that buyers should keep in mind, according to Consumer Reports. Be aware of the information you provide, since you’re trusting the retailer to keep it safe. A good tip is to alert your recipient ahead of time that you’re sending them a gift card and encourage them to change passwords often to thwart potential fraudsters.
7. Set realistic limits for your kids.
We all want to help raise our next generation of financially prepared adults. That type of education starts young, and the holidays can be a big part of setting realistic expectations. If you’re shopping for gifts with your children, set financial boundaries that allow them the flexibility to choose creatively within a set budget. Having an understanding that holiday spending is not a free-for-all is an important step in helping kids become financially fit adults and future parents.
Most importantly, remember that no matter the size of your family’s budget, the amazing spirit of the holidays, and how that translates to being together and thoughtful to one another, is what’s most important. Game time, cooking together and other low-cost experiences can be some of the most cherished, long-remembered gifts — ones that do not come with a large price tag.
Advia is an Equal Opportunity Lender. Federally Insured by NCUA.