Thanks to inflation, the majority of Americans (26%) plan to spend $100 to $300 more on holiday shopping this year than last year, a recent GOBankingRates survey found — and this is causing some financial stress. Fourteen percent of Americans say they feel pressure to spend more than they are comfortable with, and 11% say they will go into debt due to holiday spending. But this doesn’t have to be the case.
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GOBankingRates spoke with best tips for managing your finances during the holidays.
“While your needed expenses take precedence, set aside some money for your holiday shopping list so you’ll be prepared ahead of time,” Yang said. “The easiest way to do this is by setting up automatic withdrawals every time you get paid, so you’re already accounting for it in your budget.”
When it comes time to holiday shop, set a spending limit based on how much money you have set aside, and stick to this amount to prevent racking up debt.
“If you are trying to stick to a budget, it’s important to track your spending,” Yang said. “During the holidays, there are a lot of expenses, and they add up quickly. Find a tool that helps you set your budget and stick to it. By keeping track of your spending, you’ll be more in touch with how you’re doing.”
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One way to ensure you don’t spend more than you have is to pay with cash or debit.
“I used to put everything on a credit card even if I didn’t have enough money to pay for it,” Yang said. “I’d rack up credit card bills and the interest would hurt.”
While paying in cash will help you stay on budget, there are certain times when it pays to use your credit card. Now is the time to cash in on credit card rewards you earned throughout the year.
“When I was in my 20s, I didn’t take advantage of this enough,” Yang said. “This is an easy way to pay off your gift expenses. According to Amex Trendex, 60% of respondents plan to use their reward points for statement credits to offset holiday expenses.”
Even if you set a budget and plan ahead, it’s still possible that you will overspend this season.
“If you overspend during the holidays, I recommend creating a plan at the top of the year with attainable steps,” Yang said. “A new year is the perfect time to re-evaluate your finances. Make sure you’re maximizing your accounts and not paying unnecessary fees.”
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Methodology: GOBankingRates surveyed 1,025 Americans ages 18 and older from across the country between Oct. 17 and Oct. 21, 2022, asking 18 different questions: (1) Do you plan on spending more or less on holiday shopping this year?; (2) With the current state of inflation, how much more do you expect to spend on holiday shopping this year?; (3) What is your favorite place to shop for the holidays?; (4) Do you have to change any of the following holiday traditions this year due to rising costs?; (5) Where do you do the majority of your holiday shopping?; (6) How much do sales factor into your holiday shopping?; (7) How much time do you take off from work during the holidays?; (8) How much would you typically spend on a gift for a family member?; (9) How much would you typically spend on a gift for a friend?; (10) Where have you noticed rising prices for holiday shopping/expenses this year? (Select all that apply); (11) When did you start or plan to start your holiday shopping this year?; (12) As the holiday season approaches, which of the following applies to you?; (13) How much do you plan to spend exclusively on gifts this holiday season?; (14) How much do you plan to spend on travel during the holidays?; (15) Who do you tip for the holiday season?; (16) Do you tip extra to service workers (food delivery, Uber, hairdresser, etc.) during the holidays?; (17) What is the primary way you plan on paying for your holiday spending?; and (18) What holiday purchases do you make at the dollar store? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
This article originally appeared on GOBankingRates.com: TikTok’s Humphrey Yang: How To Manage Your Finances During the Holidays
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