Staying Financially Jolly This Holiday Season

By: James Flippin · November 21, 2022 · Reading Time: 3 minutes

Tighter Budgets

The spirit of the holidays can be a wonderful thing. Giving gifts, sharing meals, and spending time with friends and family are experiences etched into this time of year. But it can also be stressful — and expensive.

Lately, for many Americans, it’s both. With inflation raging at multi-decade highs, 60% of Americans report that they’re living paycheck to paycheck, per a LendingClub (LC) survey completed last month.

Inflation hits many consumers twice as hard because while prices rise, real wages decline. Consumer spending power has been sapped, with a report from Salary Finance revealing that two-thirds of working adults believe their financial situation is worse now than it was a year ago.

Mind Your Use of Credit

Data shows US consumers have increased their use of credit cards lately. Balances jumped 15% last quarter, the highest increase in over two decades. A survey from RetailMeNot (ZD) also suggests an increasing number of plans to use “buy now, pay later” loans.

But using credit cards is an expensive option, with interest rates at 19% on average — an all-time high. Financial advisors will routinely remind clients that credit card debt is easy to collect, and hard to get rid of.

RetailMeNot’s poll shows around 50% of shoppers plan to buy fewer items this year amid higher prices. One-in-four shoppers plan to buy cheaper versions of gifts, or even more practical items like gas cards, per a separate survey gathered by TransUnion (TRU).

Step by Step

While holiday shopping may be dominating your financial thoughts right now, it’s important to remember the first priority of covering the basics. Once your housing costs, groceries, and other bills are paid, write out a budget for your holiday spending.

From there, diversification is key. Shopping online, in store, and via apps can help you find the best prices. Getting started early and spreading purchases out also helps manage your cash flow. That same mindset should be applied to travel. Buying flights early can mean landing better prices, and Tuesdays and Wednesdays tend to be the cheapest days to fly.

Holiday shopping doesn’t have to be stressful. Planning ahead can help the most wonderful time of the year live up to its name.

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