Holiday financial stress is a phenomenon that falls upon consumers whenever the holidays come around. More than the holidays being about family and being thankful for all that you received for the year, it also entails huge expenses. This includes a lot of items from gifts you buy for people around you to even travel expenses when you visit family or friends.
Not to take anything away from the holiday season, it is a joyous occasion. More than anything, it is a time to be thankful for all the wonderful things you received throughout the year. The holiday season is also a good opportunity to reach out and thank the people that have made a huge difference in your life the past few months.
The holiday season is also the time when people reward themselves for reaching a goal they have set early on. These and a lot more are some of the reasons why holiday financial stress is rampant during the season. You usually need a big amount to get through the holidays. The National Retail Foundation shares that consumers spend over $1,000 during the winter holidays. This is because buying gifts, spending on travel arrangements, or even hosting parties are quite expensive.
That is why you need to make financial preparations for the holiday so you can enjoy it to the fullest without having to go into financial ruin. Not only will you be ending the year in challenging financial position, but you are also starting a new year in potential debt. Once that happens, you can spend a great part of the year just repaying your debts.
What causes holiday financial stress?
Holidays are supposed to be fun and a happy occasion as you spend it with people that matter to you. From family members whom you haven’t seen for a while now to friends that have made a huge impact in your life. In all these, money still plays a big part in the decisions you will make. This is why it can lead to stressful situations.
You could still be paying down debt from last year’s holiday expenses
As mentioned earlier, there is a good chance that you might still be paying for the expenses you incurred from last year. There is a good chance that you could have overspent for gifts and party needs during the holidays. It can be using a credit card or worse, dipping into your emergency fund believing you can put it back quickly the following month.
The result is that you could be starting the new year in debt and it will take you a good part of the year to pay everything back. This is because your monthly household budget cannot accommodate all the additional expenses. You end up paying a small amount every month just to stay current where you pay a lot of interest and other charges along the way.
The number of gifts to buy
One of the biggest expenses you could be making and a huge source of holiday financial stress are the gifts you need to buy. To be clear, it is simply a tradition and no one is forcing you to buy these gifts. However, it has already been a big part of the tradition that you find the need to go out and buy gifts for people in your life.
These are given to family and even friends to show your love and appreciation. It does not have to be expensive presents but that really depends on your budget. There are times when emotions and feelings get the better of you and you overspend on gifts. This is the start of a challenging repayment period after the holidays.
The travel you have to arrange
Holidays are normally spent around people that you love and if you are far from them, holidays usually entail travel time for you. With any travel plans, it involves expenses from the plane ticket to gas money and even food costs. If you are visiting friends, you might also have to factor in accommodation into your expenses when you travel.
Tips to get ahead of holiday financial stress
The holidays are supposed to be an event you look forward to but the possibility of being in financial problems can dampen the holidays. If you want to enjoy the season, here are a couple of tips to help you celebrate the holidays without being in debt.
Prepare a budget for your holiday expenses
There is a good chance that this is not your first holiday celebration so it would be a good idea to start planning based on the budget you had last year. Lookup a list you had last year or even the expenses you incurred for the holidays. Get them and start planning around it because there is a good chance your expenses are within that range.
If you are trying to avoid holiday financial stress when it comes to gifts, take a look at the people you gave gifts to last year. They are most likely the same people you will be giving gifts to this year. List down the amount you want to spend per person and total that number. Once you do, that is what you need to save up for this holiday for gifts alone.
Monitor your expenses carefully
Once you have that list, you have to monitor your expenses very meticulously. The need to put your expenses under the microscope before the year ends is because the temptation to overspend is there. From your favorite shops and brands coming out with sale promotions to make you spend to people around you selling various items.
Not to mention travel can become much more enticing when a lot of people you love are coming together over the holidays. You need to make sure that you find creative ways to manage these types of expenses. It can be confirming and booking flights early to make sure you can get great deals. Try to explore using miles on your card as well to either get a discount or even free tickets.
Gift giving is a little more challenging since it is best to buy something the recipient will appreciate. You need to find out what they want and buy it for them. This can become tricky especially if they want expensive items. You have to be creative in either getting a good sale or a different item that has a similar appeal. You can also give them something you made yourself because that makes it extra personal.
Pay off your credit card debt at the end of the month
There is nothing wrong in using your credit cards to pay for the items you need over the holidays. It can be for gifts, paying for suppliers for a party, or even booking flights and hotel for travel. What you need to remember though when using your card is that you have to pay it off at the end of the month. This prevents interest, fees, and other penalties from showing up in your billing at the start of a new year.
Holiday financial stress is a real problem a lot of people go through before the year ends but there are ways around it. Money management and having the ability to think ahead will help you manage this stress point and help you end the year on a high note.