The holiday season is here. A time for festivities, cheer, and reunions with family and friends. But as we
deck the halls, many of us will have something else on our mind: money.
In fact, more than three in four Americans overspend during the holiday season, with the average household adding nearly $1,000 in debt. While it may seem like a fact of life, going into gift-purchase debt is not inevitable.
Here are Four key tips to stress-free holiday spending, allowing you to devote yourself to some worry-free celebrating.
- Create a Budget
A good rule of thumb is to spend no more than 1.5 percent of your annual income on holiday expenses . Once you’ve established your maximum budget, you can then then make a list of potential spending – on gifts, food, entertaining, travel – and see what might need to be modified or cut.
To prevent yourself from scrambling to save right before the holidays, it’s a good idea to establish a holiday fun ahead of time. At Thrive, you can open a Christmas Club account at any time during the year to set aside special savings for the holidays. Saving early will have you rolling into the holidays with the money you need and a spending limit to keep you in check.
- Be Smart with Credit
When used wisely, credit cards can be your friend: many of them offer special offers like reward points and travel miles, leveraging your everyday purchases to bring that perfect gift or special holiday trip within reach. And with purchase protection, you’ll be protected for losses in a way you may not be if you pay in cash.
So how to enjoy the benefits of credit cards without the dangers? First, choose a credit card that allows you to repay purchases over time, without a high interest rate. Second, make sure you pay the balance due in full and on time – every single month.
- Know Your Limits
If your finances don’t allow you to buy everyone on your list a gift, be honest with yourself about it. There are plenty of other ways to show people that you care: by spending time with them, sharing a plate of cookies or treats, making your own gifts, or choosing a small, personalized present instead of a larger, expensive one.
Another popular idea is getting everyone in your circle of family or friends to draw one name to give a gift to, like a secret Santa exchange Getting creative helps you spread holiday cheer without breaking the bank.
- Secure Your Information
With each passing year, more holiday shoppers opt to avoid the lines and crowds by purchasing their gifts online. But however convenient and comfortable, online shopping is not risk-free: according to a study by Javelin Strategy and Research, 16.7 million US customers were the victims of identity fraud in 2017 , with a total of $16.8 billion stolen.
Fortunately, there are some basic steps you can take to protect your information, such as monitoring your accounts and securing your devices. And, of course, if you are the victim of identity theft, it is important to respond rapidly.
In today’s world, holiday stress might feel as American as apple pie – but it doesn’t have to! With a budget, a holiday spending fund, smart use of credit, honest limits, and protected information, you can make your holiday season more like a Hallmark special and less like National Lampoon’s. To find out more about stress-free holiday shopping and about smart finances in general, check out our online Financial Education Center.