From gifts and decorations to food and travel, the holiday season is fun…but expensive!
Investopedia reports that in 2024, the average holiday budget per person in the U.S. is expected to be a whopping $1,778, an 8% jump compared to 2023. That’s a lot of money, especially when you consider the fact that around half of consumers say they’re living paycheck to paycheck.
Strapped for cash, many people take on debt to cover their holiday expenses. In fact, Newsweek recently reported that 46% of Americans still have holiday debt from last year!
It’s no secret that “bad debt” (debt that doesn’t help your net worth or create value in the long run) is something to avoid. Carrying high-interest credit card debt that accumulates over time reduces your financial freedom, limits what you have available to save and invest, and can impact your credit score. Plus, it adds stress to your life.
So, are you ready to experience the joys of a debt-free holiday season? These six secrets can help.
1. Remember Holiday Spending is NOT an Obligation
Social expectations and traditions may make you feel like you must go all out on gifts and more. However, it’s up to you—and only you—how much (if anything) you spend.
If you’re a person who has historically been a big gift giver, but you’re cutting back this year, it’s generally a good idea to let people know ahead of time. By communicating and setting expectations, you can help avoid any awkwardness or hurt feelings.
When sharing this decision, simply explain that you want to reduce financial stress and celebrate more meaningfully. You may find that by having this difficult conversation, you’re reducing holiday pressure for everyone involved.
Related: 7 Tips for Handling Anxiety & Depression During the Holidays and Beyond.
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2. Do Not Apply for a New Credit Card to Help with Holiday Shopping
You get to the register with an armful of gifts and the store clerk says you can save 5% on your purchase today if you apply for their store credit card. What do you do?
Remember that opening a new card to help with holiday shopping is generally not a good idea. Not only can this encourage overspending, but it can saddle you with high interest rates and ding your credit score.
3. Make a Budget and Stick With It
Avoid finding yourself in financial dire straits come January by setting a holiday budget, tracking your spending, and sticking within your means. To do this, list expected expenses and then set a realistic spending limit based on what you can afford without taking out debt.
Check out these 7 Tips for Safe Holiday Online Shopping.
4. Take a More Frugal Approach
Maybe you’re totally feeling the holiday spirit, and you can’t wait to decorate and give gifts. Know that you can still enjoy everything the holiday season has to offer without going into debt!
Reuse your holiday décor from last year and add some handmade touches this year. Clip some evergreen sprigs and collect pinecones for a beautiful free centerpiece.
Also consider giving homemade gifts, such as baked goods, photo albums, infused oils, homemade extracts, or custom candles. Also check out your local thrift stores. You may find the perfect unique item for someone on your list!
For more ideas, check out these 9 Thrifty Tips and Gift Ideas to Survive the Holidays on a Budget.
5. Focus on Experiences, Not Gifts
Another strategy for avoiding debt is to focus on experiences with those who matter most rather than material items.
In lieu of your traditional gift exchange, gather the group and enjoy a cookie decorating day, a holiday movie night, a Christmas concert, a holiday potluck, or an outing to see Christmas lights.
Not only will this reduce holiday stress, but it will help create lasing memories with loved ones.
6. Trim Holiday Food Costs
Everyone knows prices are up at grocery stores, and with the holidays being a season of extra eating, food bills are sure to go up. Ways to cut food costs include:
- Throwing a potluck so everyone pitches in
- Making the most of coupons and deals
- Shopping store brands
- Hosting brunch instead of dinner
- Choosing a less expensive protein, such as roasted chicken instead of turkey or pork chops instead of roast beef
Want more? Check out our blog, 6 Tips for Buying Holiday Gifts for the Grandkids.
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