SoFi

It’s the most wonderful time of the year. It’s also the time when Americans tend to go on a shopping spree. The average person spends more than $900 on holiday gifts, according to the latest research. And that’s before factoring in entertainment, food, or travel costs, or the higher inflation rate, which means your dollars don’t go as far as they used to.

Fortunately, it is possible to have a festive season without blowing your budget and starting the New Year in debt. Try the holiday budgeting tips below to help you celebrate the holidays affordably.

20 Holiday Savings Ideas

It is possible to enjoy the holidays on a budget. In fact, you may have even more to celebrate since you won’t be starting the New Year in debt. As you start making your lists for holiday gifts and activities to do, consider these clever ways to avoid overspending and still have fun this season.

1. Create a Holiday Budget

Before you start your holiday shopping, make a budget for gifts, decorations, and experiences. This will allow you to prioritize your spending in advance and identify where you can make cuts.

As a bonus, following a budget can be one way to help achieve financial security, so this could be a good practice to continue after the holidays as well.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

2. Use the Envelope Method

By making purchases with cash instead of credit during the holidays, you could end up spending more thoughtfully. Try the cash envelope system to help stick to your holidays on a budget. To do it, designate a few different envelopes for spending categories like holiday meals, decorations, and experiences, and then put cash for each into the envelopes. When you run out of money, it means you can’t spend any in that category (or you’ll have to dip into the budget for another category).

3. Host a Potluck

Hosting a gathering at your place and asking your friends and family members to bring food to the holiday meal is a good way to cut costs on your grocery bill. It’s also less stressful for you. Just make sure that you ask people ahead of time what they plan to bring so that you have enough different kinds of dishes and options for everyone.

4. Visit a Museum for Free to See the Holiday Decorations

Another holiday budgeting tip: Check out your local museum when there’s no admission fee (many cultural institutions offer a monthly or weekly date) as a fun thing to do for free. The holiday decorations will likely be up, and there may even be an exhibition of holiday ornaments or trees. It can get your seasonal spirit soaring at no cost.

Recommended: 23 Tips on Saving Money Daily

5. Take a Tour of Your Town’s Christmas Lights

There may be an area near you that’s known for looking spectacular at the holidays. Or perhaps you just drive around until you find some fun Grinch inflatables. Whatever the case, hop in the car with a friend or your family and tour the local lights and decor for a festive, free night out.

6. Hold a Cookie Swap

Instead of doing a Secret Santa gift exchange with presents, get together some friends, colleagues, or neighbors and do a cookie swap instead. It’s simple and fun: Everyone bakes a different kind of treat and then shares them, so that each guest goes home with an assortment of sweets. Just make sure each person is making a different kind of cookie so you don’t end up with duplicates.

7. Go Ice-Skating

Local ice rinks typically offer an affordable and fun way to get some exercise, along with helping to put you in the holiday spirit. It can be a great after-work outing with friends or colleagues or a family activity. You can all celebrate (and warm up) with hot chocolate afterward.

8. Head to the Dollar Store

Here’s one secret to not paying full price: Go where the discounts are. The dollar store is full of inexpensive holiday decorations as well as goodies you can put into gift bags or stuff into stockings. You can find low-cost ornaments, lights, balloons, and more to make your home more festive for the season.

9. Give the Gift of Holiday Playlists

A custom playlist is a thoughtful gift for friends and family, and it’s another way of budgeting for the holidays. And now that most music is available online, making a playlist is easier than ever. Just create a playlist on Spotify or another platform, name it, and then share the link. The recipients will appreciate the tunes!

10. Check Out Your Town’s Calendar

Your town likely hosts lots of events you can participate in during the holidays. Search for Christmas tree lightings, concerts, parades, and outdoor movie nights, which are usually free or low cost.

11. Volunteer at a Soup Kitchen

What better way to celebrate the holidays than to give back? Look for local opportunities to volunteer at a soup kitchen or local animal shelter, for instance. Your community will benefit from your kindness, and you’ll feel great for volunteering.

12. Donate Toys to Families in Need

Another way you can give back — and get the entire family involved — is to donate toys your kids no longer use to children and families in need. Search for local toy drives happening in your community to find the best place to donate them to.

13. Get Friends Together to Regift

Here’s another alternative to a Secret Santa get-together: Host a regifting party with you pals. Everyone brings a gift they received but didn’t like or use, and then swaps them. After all, one person’s trash is another’s treasure.

14. Host a Game Night

Have some board games in your closet? Invite over friends and neighbors, and host a game night. Buy some snacks like popcorn, chips, and pretzels, and serve some beverages like soda, water, beer, or wine to stay on budget.

15. Use Your Credit Card Points

If you have credit card points racked up, the holiday season can be a good time to use these rewards to purchase gifts as well as book hotels and flights at a discount.

16. Make Your Own Decorations

If you log onto Pinterest, you’ll find a number of DIY holiday decorations you can make yourself for a fraction of the price of store-bought. For instance, you could create a wreath out of cranberries or string up popcorn on your Christmas tree.

If you have a natural area nearby where pinecones are abundant and yours for the taking, consider a winter walk to gather some. You’ll get some fresh air and exercise, plus these and any pine boughs on the ground can make a festive seasonal display at home.

17. Get Creative with Gift Wrap

Rather than buying expensive wrapping paper and ribbons, find some low- or no-cost ways to make your gifts look great. For example, you could use craft paper that you decorate with a few colorful flourishes with a marker. Yarn or twine can work well in place of ribbon and save you money.

18. Make Some of Your Gifts

You can construct some great gifts at home without having to spend much on materials — and at the same time, get the satisfaction of practicing a more sustainable way to shop. For example, you could make a family cookbook with treasured recipes and stories about the person they came from. If you sew or knit, you could whip up items like scarves or tote bags, and if you’re a whiz in the kitchen, you could make jams and jellies, and more.

19. Save Your Shopping for the Biggest Sale Days

Black Friday and Cyber Monday are great times to save on certain items. The key is knowing in advance what price actually constitutes a deal. Many stores advertise their upcoming sales around this time of year, so you should have plenty of time to research and comparison-shop.

20. Avoid Last-Minute Purchases

If you put off shopping until the last minute, you’re much more likely to blow your budget. Schedule time to shop before the holiday season is in full swing to help you avoid the impulsive overspending trap.

The Takeaway

The holidays don’t have to be expensive for you and your family to enjoy them. Focus on spending time with loved ones, investing in your community, and exploring your DIY side to get the most out of the season while spending the least.

It can also be helpful to start saving up money ahead of time. You could designate a certain bank account for the holidays, for instance, and contribute a little bit to it each week.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

How much does the average person spend during the holidays?

The average person spends more than $900 on gifts alone, according to the latest research. That doesn’t include decorations, holiday entertainment, or travel.

Is it possible to celebrate the holidays on a tight budget?

Yes! There are many ways to celebrate the holidays without spending much money. For instance, you can make gifts and decorations yourself. Rather than buying and cooking an elaborate holiday dinner, you could host a potluck and ask each guest to bring a dish. And you can take advantage of no-cost seasonal activities like free nights at a local museum, holiday parades, and outdoor movie nights in your town.

---

Photo credit: iStock/Tijana Simic

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

4.60% APY
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK1023006

Read more

Bonds can make up an important part of a diversified portfolio, but there can be diversity within bonds as well. For instance, corporate bonds are one type of debt security that may offer higher returns than government bonds, but they might also come with higher.

What Is a Corporate Bond?

A bond is a debt security that functions much like an IOU. Governments and companies issue bonds as a way to raise capital. For example, a state might issue bonds to build a new bridge, and the U.S. Treasury issues Treasury Bills (T-Bills) to cover its expenses.

Corporations also sell bonds to raise capital. They might use the money raised through these financial securities to reinvest in their business, pay down debts, or even buy other companies.

When investors buy corporate bonds, they are loaning a company money for a set period of time. In exchange, the company agrees to pay interest throughout the agreed upon period. When this time is up and the bond reaches “maturity,” the issuer will return the principal. If a company can’t make interest payments or return the principal at the end of the period, they default on the bond.

How Do Corporate Bonds Work?

Bonds are a huge part of the broader securities markets. U.S. fixed income markets comprise 41.3% of global securities. To understand the bond market and how bonds work, you need to know a few important terms:

•   Issuer: The entity using bonds to raise money.

•   Par Value: Also known as the nominal or face value of the bond, or the principal, the par value is the amount the bond issuers promise to repay when the bond reaches maturity. This amount does not fluctuate over the life of the bond.

•   Price: A bond’s price is the amount an investor pays for a bond in the market. This amount can change based on market factors.

•   Coupon rate: Also known as coupon yield, the coupon rate is the annual interest rate paid by the bond issuers based on the bond’s par value.

•   Maturity: The date at which a bond’s issuer must repay the original bond value to the bondholder.

Benefits and Drawbacks of Corporate Bonds

While corporate bonds can add a lot of benefits to a portfolio, before investing, it’s important to consider the drawbacks, as well.

Benefits	Drawbacks
Bonds, including corporate bonds, can be an important part of a diversified portfolio.	Bonds may offer lower returns than other securities, such as stocks.
MMany investors consider corporate bonds to be a riskier investment than government bonds, such as U.S. Treasuries. As a result, they tend to offer higher interest rates.	If the issuer cannot make interest payments or repay the par value when the bond reaches maturity, the bond will go into default. If an issuer goes bankrupt, bondholders may have some claim on the company’s assets and possibly be able to recoup some of their losses.
Bonds are relatively liquid, meaning it is easy to buy and sell them on the market.	Some bonds are “callable”, which means issuers can choose to pay them back early. When that happens, bond holders won’t earn as much interest and will have to find a new place to reinvest.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Types of Corporate Bonds

There are three main ways to categorize corporate bonds:

Duration

This category reflects the bond’s maturity, which may range from one to 30 years. There are three maturity lengths:

•   Short-term: Maturity of within three years.

•   Medium-term: Maturity of four to 10 years.

•   Long-term: Maturity of more than 10 years. Longer-term bonds typically offer the highest interest rates.

Risk

Every once in a while, a corporation defaults its bonds. The likeliness of default impacts a company’s creditworthiness and investors should consider it before purchasing a bond. Bond ratings, assigned by credit rating agencies, can help investors understand this risk.

Bonds can be rated as:

•   Investment grade: Companies and bonds rated investment grade are unlikely to default. High-rated corporate bonds typically pay a slightly higher rate than government securities.

•   Non-investment grade: Non-investment grade bonds are more likely to default. Because they are riskier, non-investment grade bonds tend to offer a higher interest rate and are often known as high-yield bonds.

Interest Payment

Investors may also categorize bonds based on the type of interest rate they offer.

•   Fixed rate: With a fixed rate bond, the coupon rate stays the same over the life of the bond.

•   Floating rate: Bonds that offer floating rates readjust interest rates periodically, such as every six months. The floating rate depends on market interest rates.

•   Zero-coupon bonds: These bonds have no interest rate. Instead, when a bond reaches maturity, the issuer makes a single payment that’s higher than purchase price.

•   Convertible bonds: Convertible bonds act like regular bonds with a coupon payment and a promise to repay the principal. However, they also give bondholders the option to convert their bonds into company stock according to a given ratio.

Difference Between Corporate Bonds and Stocks

Bonds differ from other types of investments in a number of important ways. When investors buy stocks, they are buying ownership shares in the company. Share prices may fluctuate depending on the markets and the health of the company. If the company does well, the stock price may rise, and the investor can sell their shares at a profit. Additionally, some companies share profits with their shareholders in the form of dividends.

When an investor purchases a corporate bond, on the other hand, they do not own a piece of the company. The bondholder is only entitled to interest and the principal. Those amounts don’t change based on company profits or the stock price. When a company goes bankrupt, bondholders have priority over stockholders when it comes to claims on the issuer’s assets.


💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

How to Buy Corporate Bonds

Investors can buy individual bonds through brokerage firms or banks. Corporations typically issue them in increments of $1,000. Much like investing in an initial public offering, it can be tricky for retail investors to get in on newly issued bonds. Investors may need a relationship with the organization that’s managing the offering. However, investors can also purchase individual bonds on the secondary market.

Another way to gain access to the bond market is by purchasing bond funds, including mutual funds and exchange-traded funds (ETFs) that invest in bonds. These funds can be a good way to diversify a bond portfolio as they typically hold a diverse basket of bonds that tracks a bond index or a certain sector.

Investors can purchase bonds through a traditional brokerage account or an Individual Retirement Account. They may be able to purchase bond funds through their 401(k), and possibly individual bonds through a brokerage window within the 401(k).

Recommended: IRA vs 401(k) – What is the Difference?

The Takeaway

Before buying bonds, it’s important that individuals consider how they’ll fit in with their financial goals, risk tolerance, and time horizon. For example, if you’re working toward retirement and have decades to save, you may want a portfolio that’s mostly stocks since stocks generally tend to outperform bonds in the long run. If you’re close to your goal — or have a low appetite for risk — you may want to stick with bonds.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

---

Photo credit: iStock/Prostock-Studio

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

SOIN0723077

Read more