The adage, “less is more” applies perfectly to this holiday shopping season for those ready to risk it all and overspend during this time that shouldn’t be taxing on your finances.
Granted, during the holiday season, it’s easy to overspend on family, friends and other loved ones who made our nice list this Christmastime — especially when you see their eyes light up as they open their gifts from you. But this Christmas might be even trickier to navigate financially as prices increase and product shortages are a potential problem for Americans and their typical spending habits.
According to financial group Fortunly, in 2018, U.S. households spent an average of $1,536 during the Christmas season. In 2019, the typical amount spent was reduced to $1,496. Just about a third of that portion makes up the average amount spent on Christmas gifts and gift cards, which is $511.
The price went up though this year with no signs of slowing down.
Affirm Research shows that 48 percent of 2,000 surveyed consumers plan to spend more money on the 2021 holidays due to COVID-19’s impact on 2020 celebrations, according to nonprofit GreenPath Financial Wellness. Seven in 10 respondents said they typically go over budget during the holidays. A major pain-point this year for businesses is a kink in their supply chain – a backlog at U.S. ports.
Late last month, the Port of Los Angeles (which handles 40 percent of U.S. imports) is facing a record backlog. U.S. consumers are now facing the “Everything Shortage,” which leads to higher prices for food, fuel, furniture, cars and holiday gifts.
Coupled with numerous consumers’ psychological needs to create a perfect holiday season with gift purchases, buyers could be facing a financial minefield.
“It’s easy to get wrapped up in the commercialism of the season, but overspending can place a financial strain on individuals and families well into the new year, and beyond,” said GreenPath Financial Wellness CEO Kristen Holt. “It’s important to set a realistic budget for spending. Focusing on non-traditional gifts, the joy of experiences and the resulting memories can be just as rewarding without damaging your finances, especially as prices on essentials are rising.”
GreenPath encourages people to consider if spending less could be more this holiday season? The team at GreenPath suggests consumers rethink their holiday plan, set a budget and stick with it and take concrete steps to avoid excess holiday debt.
Ways to celebrate the season in a budget-conscious way include:
- Create a Holiday Spending Plan.
- Write down a holiday budget that includes all planned spending – food, décor, travel, gifts, etc.
Also, simplify the Season this year and consider less complex celebrations or find alternative ways to revel in the season.
Resist the urge to splurge on decorating and large parties and choose to gather with family and friends without breaking your budget. As gas and grocery prices are expected to increase, rethink the elaborate (and costly) holiday dinner and invite your loved ones to meet in the middle for a more informal get-together.
Instead of hard-to-get items, gift an experience, a family portrait or an online class. Open a 529 savings plan for the kids – the gift that gives long-term.
Also, think out of the box and give a non-traditional gift of volunteering in someone’s name.
“Volunteer at a friend or loved one’s favorite charity or provide a contribution on their behalf,” GreenPath suggested. Traditional volunteering at local food pantries, community centers, humane societies or nonprofit organizations doesn’t hurt either.
Also, get a bit creative when it comes to cutting costs with online shopping. By “abandoning” your online shopping cart for 24 to 72 hours, the retailer may grant you a discount or perk. Or you might change your mind and decide you really don’t “need” the purchase.
“While gift-giving is a long-standing holiday tradition, spending time with family and friends after months of pandemic isolation may be the most meaningful gift of all,” GreenPath noted.