I love the holidays but I can go a little overboard spending on gifts and entertaining. How can I spend less this year?
The holidays are all about generosity, not to be confused with overspending, and traditions, not to be confused with an inability to make changes that reflect our current financial lives. We can be generous and honor our traditions while curbing overspending, and the stress that comes with it, with some thoughtfulness and planning. Here are some specific techniques that have helped some of our members avoid overspending for the holidays:
- Make all or some of your gifts. Whether it’s your own salsa, a baked good or a piece of art, a gift you make is especially meaningful. We often cite that making gifts can cut down on spending, but of course making gifts is not “free,” so be careful about the cost of that too and factor it in your spending if you go that route.
- Plan spending. Make a list of those you’ll be giving gifts and assign each a dollar amount. Add it up. Adjust as needed, and then stick to the plan. I’m a big fan of dividing money into buckets. I have several buckets of savings that include: vacation, holidays/gifts, long-term expenses (greater than 12 months), short-term expenses (less than 12 months), giving, etc.
I like the holiday/gift category because holiday time is not the only time gift buying can go overboard. Birthdays, showers, weddings and anniversaries—all these occasions throughout the year can add up and throw off your budget. Putting aside dollars each paycheck and then not spending more than what is in your holiday/gift bucket will keep you on track.
- Shift your expectations. Bigger is not always better, and neither is sticking to habits that aren’t working for your financial wellness. “We’ve always spent $X for the holidays” is not a good reason to spend $X, especially as your finances can fluctuate from year to year. Have a conversation before the holidays with loved ones to reset expectations regarding gift giving as needed. And if one of your family members approaches you, be flexible. It takes courage to bring up finances.
- Be thoughtful. Rushing to a store for a gift can lead to impulse spending and, sometimes, a gift that is not a great fit. Often a small thoughtful gift that represents the recipient’s interests or needs is better than an expensive gift that doesn’t.
I personally love consumable gifts. So if you were giving me a gift, a consumable would make me happy! (smile). Some people appreciate (and I am one of them) a donation to a nonprofit they care about. Last year our youngest gave his older brother a “coupon” for him to caddy for him for nine holes of golf. This summer, the gift was “paid.” We’ve given my parents a “spring cleaning coupon” before where my three sisters and I all spent a day together deep cleaning.
- Consider group gifts. You may give a couple or family a game, movie night basket, or the makings of a great dinner they can share together rather than overspending on individual gifts for everyone.
- Stretch your dollars. Watch for discounted gift cards some retailers offer during the holiday season, and use a credit card with points like Summit’s Visa Rewards card to make your dollars go further.
I hope these tips are helpful to you this year. For next year, consider dividing your expected holiday spending over the year’s paychecks and setting up regular deposits to a special savings account. It will give you a great start for next year.
Kim Sponem is CEO/President of Summit Credit Union, a $2.3 billion, member-owned financial cooperative with more than 147,000 members. Kim has a passion for empowering women to improve their financial well-being for a richer life. Ask Kim your money questions at SavvyMoney@SummitCreditUnion.com.