It’s no secret that, as the holidays approach, holiday debt is a real concern.
This time of year should be magical, not a time that you dread because you have no idea how you will pay for everything.
To help you start planning now, I have a few ways to prevent holiday debt that are easy for anyone to utilize this year.
Ways To Prevent Holiday Debt
No matter what your current financial situation may be, there are some simple steps you can take to prevent holiday debt.
For most families, the holidays is a time for giving gifts, joining together for meals, and celebration.
None of these things has to put you in debt, but unfortunately it has become commonplace to find post-holiday creditors knocking at the door. The pressure is tough. You want to get the perfect gift and entertain with your family and friends, but that doesn’t mean you should whip out your credit card.
You will regret it come January.
These tips to prevent holiday debt are a great beginning to staying financially secure while continuing to enjoy the holiday season.
Set a budget in advance
This is important for making sure you know what you can spend. Looking at what you have in savings already for the holidays, but also what you have available in flexible income that can be designated for holiday spending.
Right now you might be thinking, “Umm, I don’t have anything in savings.” That’s ok. You will need to start cutting back on any unnecessary expenses so that you can use that money for the holidays. Putting a monetary value to how much you are going to spend will make a big difference.
Not only will it help you to keep track of your spending, but you can also figure out how much money you will need for each individual cost.
A budget helps, but you need to break that down as well so you aren’t overwhelmed. I recommend setting up your budget with specific categories you can designate amounts to help limit your spending.
- Holiday meals or parties you are hosting should have a set budget included in your holiday budget. This will help you to not lose food budget when the food will only be feeding your family 1-2 meals but could cost as much as an entire week of food.
- Gifts for each person on your list broken down by family, friends, teachers, assistants. You can designate a set amount for each group of people, then designate smaller amounts for each person. If you have $500 to spend on all of your children but have 5 kids, that means you would stay within a $100 per child range. This works for almost all gifting. (more about this below)
- Set aside funds for holiday travel. If you plan to go back home for the holidays, make sure to calculate gas, transportation like airfare or rental car, and hotel stays.
Use a Gift Tracker
This is one of the easiest ways to prevent holiday debt. All you have to do is sit down and make a list of everyone who you will be purchasing a present for. Next, you will want to figure out your total budget for gifts this holiday season.
Then, you can break it down by each person. You can print out my free worksheet to help you keep track of your presents and budget here.
Acquire gifts throughout the year
This is one of the biggest ways to prevent holiday debt. By grabbing gifts at discounts throughout the year, you save tons of money on last minute items. Many people recommend a gift closet, and I personally love the idea.
By shopping throughout the year, you can spread the expenses out over time and not feel the hit or pressure as the holiday season approaches.
- Shop after holiday or seasonal clearance for games, toys, candles, specialty lotions or bath products, pictures, home décor, and even clothing. These items can easily be uses for gifts for any reason or season.
- Pick up back to school clearanced supplies like crayons, pencils, pencil cases, pens, and similar items for low prices and use for stocking stuffers or kids parties.
- Utilize coupons and special buy one get one free offers at toy stores or housewares stores for low cost gift items.
- Save rewards points from your local drug store purchases and use toward low cost gift items when on sale. Rewards can be used to purchases bath and body gift sets, toys, books, candles, nail polish, and sometimes jewelry or gift cards.
Limit how many gifts you give
If you have a large extended family, it can be tough to manage gifts for everyone. Many families already have a tradition of drawing names or just buying for the kids.
This works great for everyone involved. Even if your family prefers gifting to everyone, you can simply inform the extended family politely that your budget doesn’t allow extensive gifting and you are going to focus on giving just to the children.
It can also be tough to limit with kids in school and the fact that they are often helped by multiple aids, coaches, and teachers. Buying a group gift, or something that can be shared like a fruit basket or candy basket is a good idea if possible in those cases.
Create gifts yourself
This is one of the best ways to prevent holiday debt. By making your own homemade gifts, you can easily cut out a ton of expenses.
This has become more and more popular in recent years, and with millions of ideas on Pinterest and similar DIY websites, you are sure to find just the right gift for your budget. If you think handmade gifts are usually junk, think again.
There are literally thousands of ideas that are budget-friendly, useful, and that will be loved.
- Homemade soaps, lotions, candles, and other beauty or personal products
- Hand knitted or crocheted hats, scarves, cardigans, shawls, and socks.
- Mason jar gifts that include soup mixes, dip mixes, cookie mixes, or kits for nail care, hair care, or creating another fun craft.
- Personalized photograph, frames, artwork, or home décor items.
- Upcycled items that create useful shelves, storage bins, or other projects that the receiver can actively use.
- Homemade breads, candies, jams, cookies, preserves, wine, or beer are all great consumable gifts everyone loves.
(Related: DIY Gift Ideas)
Leave credit cards at home
The final tip for how to prevent holiday debt is all about leaving your credit cards at home and only shopping with cash in hand.
(Related: Using the Envelope System)
By paying cash for your purchases, you are less likely to go over your budget for each person. When you bring the credit cards along for your shopping trip, the temptation to overspend can be more than you can resist.
It is even better to shop for one person at a time and take only the budget you set aside for that person.
That way you don’t find yourself spending too much on one person and not having enough cash left to cover the gift for another person on your list.
Even though it may seem impossible to prevent holiday debt these tips can help you get started. Simply arm yourself with our top ways to prevent holiday debt as you head into the busiest shopping and gifting season of the year.