The holidays tend to be an expensive time of the year. But this year’s holiday season has been especially tough on a lot of people, financially speaking, due to inflation.
Not only does it cost more to purchase gifts and other holiday items, but many consumers had racked up credit card debt before the holiday season even kicked in, due to covering their basic bills. And so the idea of taking on even more debt might seem daunting.
It’s not surprising, then, to see that 8 in 10 consumers are cutting back on holiday spending this year, according to the latest BMO Real Financial Progress Index. And you also may want to follow their lead — even if you’ve already spent quite a bit of money on the holidays to date.
Don’t dig yourself into a deep hole
These days, credit card interest rates are up in the wake of rate hikes implemented by the Federal Reserve. That makes it more dangerous and expensive than usual to be carrying a credit card balance. And that’s why it pays to look at reducing your spending for the remainder of the holiday season — even if you haven’t made any cutbacks so far.
What changes can you look at? For one thing, if you’re not finished shopping for holiday gifts, rethink your plans. Instead of plunking down another $200 or $300, give yourself a smaller budget or consider whittling down your gift list if money is tight. In many cases, a nicely written card or note will go a long way toward spreading joy for the holidays.
Next, think about how you’ll actually be celebrating Christmas. Are you hosting a large crowd? If so, it’s not too late to ask people to bring a beverage, dessert, or side dish so you have less to prepare (and fewer items to buy). And if you’re being asked to travel a long distance to see family for Christmas and you feel you can’t swing the cost of gas and tolls, bow out — especially if they can’t house you and you need to pay for a hotel room to make that trip.
Finally, rethink your New Year’s Eve plans. New Year’s Eve is one of the most expensive nights of the year to go out. Even hole-in-the-wall restaurants tend to impose a pre-fixed menu that could have you spending twice what you’d normally pay for a meal (not to mention limit you to food choices that aren’t necessarily at the top of your list).
Instead of leaving the house, consider making it a fun night in. Order a pizza or cook something tasty, and save yourself the hassle of having to put on nice clothes and deal with crowds.
A savvy decision
Cutting back on holiday spending isn’t an easy decision — but it may be a necessary one. You don’t want to start off the new year with a massive pile of debt hanging over your head. And if you manage to trim some expenses in the coming weeks, you may not have to.
