Nothing is worse than having to take six months just to dig yourself out of added holiday debt. Unfortunately, many of the things people do to control their spending during the holiday might actually make things worse. This video and article will help you prevent overspending this Christmas!
Overspending during the holidays is a common challenge that many people face, and the statistics highlight its prevalence. Around 1 in 3 individuals admit to overspending during the holiday season.
Sales make overspending worse
Research has shown that clipping coupons, chasing store sales (like during Black Friday and Cyber Monday), and planning your purchases can actually lead you to overspend. Wait! What?! Yes, as crazy as it sounds, the very things you are doing to control your holiday spending might actually lead you to spend more than you intend to.
One factor is the allure of holiday sales, enticing consumers to make purchases they might not have considered otherwise. While chasing sales, clipping coupons, and meticulously planning gifts for each person may seem like savvy money-saving strategies, they can, paradoxically, lead to overspending.
The temptation to take advantage of discounts may result in buying items that weren’t initially on the shopping list, contributing to an overall increase in spending. You might also decide that since you saved some money on one purchase, you can be justified in spending more somewhere else. Even worse, people tend to spend the money saved from a great deal several times over!
Not all holiday expenses are gifts!
Many people underestimate or overlook various holiday-related expenses. Planning for gifts is one thing, but failing to consider other costs associated with the season can leave you vulnerable to financial strain. Unexpected expenses, such as gas for a road trip to see family, food for holiday gatherings, and festive decorations, can quickly accumulate.
These forgotten or underestimated costs can catch us off guard, leading to budgetary overshooting. In navigating the holiday season, it’s essential to strike a balance between celebrating and maintaining financial responsibility.
How to Prevent Overspending this Christmas!
Decide on a total spending limit for the holidays. Then stick to it!
Within this total, you should add in all of your holiday expenses. Travel, special meals, decorations, parties, and gifts all need to come from within this allotment! Here are a couple of methods for allocating this money and sticking to your limit
The Envelope Method
This is just like the envelope method of budgeting. Put the cash you have on for the holidays in a envelope. Every holiday purchase then comes out of this money. If you’re planning to use $100 from each December paycheck, you still can. Just add the money to the envelope with each paycheck.
The tracking method
Get a notebook or notepad and record every holiday expense, as it happens! Keep a running written account of what you have spent and how much budget remains. If you’re using a credit card for the purchases, be sure you’re setting aside that money to pay the balance. A holiday savings account is a great way to do that!
Look beyond gifts to prevent overspending
While sales and discounts can offer opportunities for savings, it’s crucial to approach them with a discerning eye. Be mindful of the full spectrum of holiday-related expenses. Look beyond just gifts to allow for a more comprehensive budgetary plan. By doing so, you can enjoy the festivities without succumbing to the financial stress that often accompanies overspending during the holidays.
If you are interested in where the statistics in this video came from, you can find the report here: https://www.newmiddleclass.org/how-youll-overspend-this-holiday-november-2018/