Holiday spending can overwhelm you both emotionally and financially, especially if you have a lot of people to shop for every year. One way to alleviate this annual stress is to make a plan for your holiday giving. Some time-tested tips are to create a budget, save money, shop for sales and borrow smartly if you need to.
Having a plan for holiday spending will give you more peace of mind as well as let you better manage your spending and debt. In this blog, we will discuss how to plan your holiday spending for this and every holiday season.
Assess Your Budget
According to Bankrate.com, one way to manage financial stress is to make a realistic budget. Calculate how much you want to spend on holiday gifts, travel and other expenses. Determine how much you want to spend per person. Also, consider if you want to host any holiday dinners and the costs that come with them.
One way to get your holiday spending organized is to break it out into categories and prioritize your list. Here is an example:
- Travel
- Gifts and gift-wrapping materials
- Shipping costs
- Holiday décor
- Hosted holiday parties
- Charitable donations
Once you have an idea of your total holiday spending, see how this compares to your monthly income. If you are over budget, it is time to start saving early for your holiday expenses. Setting aside money throughout the year lets you spread out the amount you need over several months, making it easier to save, according to Nerdwallet.com. A good practice is to have a savings account just for holiday spending and to use direct deposit to put some money into this account each payday.
Shop the Sales
Shopping during the holiday season can be hectic. From finding a parking space to crowded stores and long checkout lines, the entire experience can be challenging – even if you are in the holiday spirit. One way to be more efficient in your shopping is to start early and take advantage of pre-holiday sales which can help you stay on budget and save money.
Along with early seasonal sales, look for online discounts, according to Investopedia.com. Retailers may offer a flash sale or online coupon codes at checkout which reduce the price. Many offer free shipping, too.
Plus, shopping online lets you avoid the holiday traffic and congestion with your items conveniently delivered to your door. According to Nerdwallet, a great way to find coupons for your favorite online stores is through a quick web search for coupon codes.
Paying for Purchases
If you have saved for your holiday spending, then paying for it should be easy. For some, however, financing is a preferred option. If you need to borrow money for the holidays, you have several options available to you:
- Credit Cards: Credit cards can be an effective way to pay for holiday spending but there are some drawbacks. These include higher interest rates and hidden fees. Be sure to review your credit card disclosures to know the interest rate that you are paying and the monthly minimum required payment. If your interest rate is too high, search for a better card that will let you pay off this debt faster. You may be able to do a balance transfer to your new lower-rate credit card, too.
- Personal Loans: Personal loans are a great option for holiday expenses. Also known as signature loans, they come with fixed monthly payments, fixed terms and interest rates lower than credit cards. You can also use the loan for debt consolidation. Once approved, you will receive a lump sum of cash that you will pay back monthly.
- Buy Now, Pay Later: More retailers have been offering this option to consumers, especially for purchases of larger amounts. The benefit is that your purchase can be paid off in monthly installments which makes it easier on your budget. If you miss a payment, however, you will face late fees which can add up. Be sure you understand the terms of a buy now, pay later loan before accepting the offer. Be especially mindful if you use several of these for holiday spending because it can be difficult to track how much you owe on each loan.
- Store Credit Cards: Just like credit cards offered by financial institutions, store credit cards are offered by retailers. The stores usually offer discounts on purchases or additional reward points for using their card. If you apply for one, be sure to understand the types of fees and interest rates you will pay. Typically, they carry a higher rate than credit cards from financial institutions.
No matter how you pay for holiday spending, through savings or financing, having a clear plan will give you more peace of mind and less financial stress.
How TCU Can Help
Travis Credit Union is focused on financial wellness and can help you with holiday spending plans. Our money market accounts and certificates let you earn more with your savings, while our credit cards offer competitive interest rates plus rewards. TCU also offers personal loans.
Your financial wellness is important to TCU and we will show you how to plan, save, spend and borrow better.