A few weeks ago, my husband and I were reflecting on all our family has been through this year and the changes we will be facing next year, including a big move to a new city. When the topic of vacations came up, I made a bold money-saving proposition: “What if we don’t give each other presents this year?”
He heaved a sigh of relief. “I’m so glad you said that.”
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In your inbox every TuesdayOur decision not to exchange gifts this year will help us stay focused on contribute to our emergency fund as inflation hovers above 7% year after year and interest rates continue to rise. We place what we usually spend on gifts in a high yield savings accountand we opened a second account to save for our move, which we know will be expensive.
And we’re not completely alone in our approach to spending less this holiday season, especially with looming recession fears. Household finances have taken a hit, with families having less disposable income and higher credit card balances, which could slow holiday sales. About half of buyers of a recent survey say they plan to buy fewer things because of higher prices, and more than a third say they will rely on coupons to cut costs.
Meanwhile, retailers seem desperate to get consumers to spend as much as possible this holiday season. Most of the Black Friday and Cyber Monday deals I’ve seen have been around since before Halloween and aren’t really deals at all. Jeremy Schneider, personal finance expert and founder of the Personal Finance Club, explained it best in a recent instagram post using a TV as an example. Schneider said a $199 TV on Amazon has a list price of $349 crossed out — but the same TV has been $199 since September. Not only is it not on sale, but even if the “actual price” was $349, you’re not getting $150 in free money. You still lose $199, he says.
“Sales are not an act of charity by companies looking out for your best interest,” Schneider writes. “It’s a game that companies play to get you to spend more money.”
It’s easy to feel like you have to buy things while on vacation that you or others don’t really need. Here are some tricks I use to avoid flashy sales:
- Set expectations early on: My husband and I have already had the “discussion” with our friends and family, so they know we won’t be giving freebies this year to prioritize our finances.
- Keep a financial diary: I keep a detailed diary of every financial decision I make over the holidays to hold myself accountable. This will help me understand where I need to improve and what I’m already doing well, as well as identify my spending triggers.
- Automate my savings plan: I wanted to make my life easier while saving, so I removed any friction that might get in the way. For me, that meant automating my savings. Every time I get paid, 15% of my paycheck automatically goes into my savings.
- Store credit cards: I put all my credit cards in a drawer to avoid the temptation to use them. Out of sight, out of mind.
- Accept that I make mistakes along the way: Not all my decisions will be perfect. I might crack under the holiday pressure if I see a good sale and buy something. If that happens, I’m willing to give myself some grace.
The essential
Re-examine your financial priorities this holiday season. If freebies are adding financial anxiety to an already overwhelming year, make a new plan.