After another year of seeing deep consumer price increases, it’s understandable that the fast-approaching holiday season might be cause for a little stress. But taking a few steps to prepare your finances for the season of giving can help reduce your stress and ensure that you don’t go overboard or bust your budget.
Early polls suggest that spending this holiday shopping season will look similar to pre-pandemic spending. An October 2023 Gallup poll found that 58 percent of Americans plan to spend around the same amount on the holidays as they did in 2022. And 23 percent of Americans plan to spend less. The poll participants predicted that they would spend an average of $923 on gifts, compared to only $805 in 2020 and a record of $942 in purchases in 2019.1
Though overall spending is higher than in the first two years of the pandemic (2020 & 2021), spending patterns this year are predicted to be similar to 2022 numbers. After a year of continued inflation, people are expecting to continue paying an increased price for gift items like clothing, electronics, and toys.
So, before you start looking for gifts, check out our tips on how to stay on budget this holiday season.
Make A List And Check It Twice
The first step to any successful budget is planning for upcoming expenses. Start by deciding how much you can spend on additional expenses this season. Recommended spending for the holidays is 1-3% of the household income. So, if you make $60,000, plan to spend around $1,200 for the holidays. Of course, you’ll need to adjust this number for your situation.
Next, make a list of expenses you usually have around the holidays. Here are a few ideas to help you get started:
- Figure out who you want to buy gifts for and a few thoughts on what to buy
- Think about meals that you’ll attend or host and food that you need to make
- Consider any charitable donations you plan to make
- Take stock of any miscellaneous items you’ll need (wrapping paper, extra strings of lights, plates, etc.)
When In Doubt, Budget It Out
Now it’s time to assign a total to each category on your list of potential expenses for the season. Don’t forget to factor in shipping costs for any purchases you plan to make online. To get an idea of how much you spent around this time last year, log in to Online Banking or Mobile Banking and check your transaction history.
Add in your holiday spending to your overall household budget for the month.
Compare Prices And Track Purchases
Many stores are releasing early Black Friday ads or having sales now, so keep an eye out for big savings. One advantage of doing more online shopping this year is the ability to quickly compare prices with competitors.
The only way to make sure you stay on budget is to keep track of all of your purchases. Here are a few easy ways to stay organized:
- Use a budgeting app or spreadsheet
- Withdraw cash. When it’s gone, you’re done spending!
- Keep your receipts in case you need to return items
- Use a separate savings/checking account
Shop Local Deals
This year, it’s more important than ever to support local businesses and artists. The past few years have created a lot of financial uncertainty for small businesses in your community. By working together and spending local, we can help our neighbors and keep Main Street vibrant. Look to see if your favorite local shops offer online shopping now. You’ll get a unique gift and score a deal at the same time.
Remember to take some time to relax and reflect this holiday season. It has been a challenging year, but there is still so much to be thankful for. If you need help or support with your financial situation, we’re here for you. We offer loan payment relief options, and we can help you review your budget.
Happy holidays from all of us at Lake Trust!