Inflation have you stressed over gift-giving season? These tips will help you relax

Many consider October the official start of the holiday season, with Halloween decorations flooding the town and the talk of holiday plans picking up. Although this may be the most fun time of the year, it’s no secret these next few months also bring a major increase in shopping and spending.

With all the gift buying, traveling and party planning you may be doing in the near future, it’s important to revisit your monthly budget to ensure you have a financial plan in place to cover these extra expenses.

Let’s start by looking at some 2022 holiday spending projections to give you insight on what you can expect in the coming months.

Recent studies show that consumers are likely to feel the impact of inflation as they look to complete their holiday shopping late into this year. An article from Retail Dive shares that as a result of the economic downturn this year, holiday sales are only expected to grow between 4% and 6%, compared to an increase of 15.1% during last year’s period. So what does this mean for you?

A continued rise in prices due to inflation significantly decreases your purchasing power throughout the market. Many families will find themselves revisiting their budget and coming up with new plans for gift giving and holiday party planning to stay within their financial means this year.

Your main financial goal throughout the holiday season should be to avoid running up credit card debt or dipping into emergency savings. This will help keep your stress low so that you can head into the new year with financial peace of mind.

Holiday spending plan

The first step in preparing yourself for these next few months is knowing your financial situation. Take time to sit down with the money managers of your household to review your financial picture and spending plan for the holidays. To better understand what holiday spending you have available, map out the funds you have coming into your accounts over the new few weeks, subtract any bills that are due in this time-frame and make a list of any holiday-related purchases you know you have coming up to see if you’re on track.

Here are a few holiday budgeting tips I believe are the most beneficial:

▪ Make a list of the family/friends/parties you need to purchase gifts for.

▪ Set a limit for each person according to gift expectations and what fits within your budget.

▪ When budgeting for children’s gifts, have them make a list and pick the top two items they would love to have.

▪ Create your shopping list and look for sales on any and everything.

▪ After finishing your holiday shopping for this year, set up a holiday savings account to give yourself a cushion and minimize the stress when this time comes again next year.

Bonus Tip: Take advantage of cashback checking account offers or credit cards that reward you with every purchase. If you already plan on spending a good chunk of change this holiday season, you might as well be rewarded for those purchases with points or cash in your pocket. Many financial institutions will introduce special credit card offers around the holidays.

Stretch your dollar

Again, the most important tool to staying on track with your holiday spending is setting a plan and sticking to your budget… but it can’t hurt finding other places to cut back or save. Here are some suggestions if you find yourself struggling to cover all of your holiday expenses:

Cut back on spending: The first place to start when looking for a quick way to save some cash is to cut back on the small, unnecessary purchases. Consider skipping your daily coffee run or your weekly happy hour after work. While it may not seem like a lot of money in the moment, these purchases add up over time. You may be shocked at how much you find yourself saving.

Maximize sales: Black Friday, Small Business Saturday and Cyber Monday are right around the corner.

Group gifting: A great way to cut back on spending is through group gift giving. Talk to your siblings about going in on a gift for your parents or round up your cousins to purchase something special for your grandparents. On top of getting to save a little money personally, you’ll get the satisfaction of giving the recipient something more special or expensive than what they may have gotten otherwise.

It’s the thought that counts: No matter what you decide to give someone this holiday season, please remember, it truly is the thought that counts. Whether you purchase the No. 1 gift off of someone’s list, make something from scratch, or browse the local thrift store for a diamond in the rough, the holiday season is about celebrating with the people that mean the most to us. If there’s anything these past few years have taught us, it’s that spending time together is the best gift of all.

Shrink your circle: Consider cutting back on how much you spend on each person, or the number of people you buy for in general. If you typically buy for extended family members or groups of friends, don’t be afraid to have the tough conversation of pausing or simplifying the gift giving for this year. The odds are that these people will completely understand wanting to cut back because a lot of us are in this same situation. It’s all about spending quality time with the people you love anyway, isn’t it?

Let’s Talk Money is powered by CommunityAmerica Credit Union and this week’s feature comes from Financial Well-Being Coach Janelle Holland.

This story was originally published November 2, 2022 at 6:00 AM.