The most wonderful time of the year is here — but if you don’t have a plan, it can quickly become the most financially stressful, too.
Despite inflated prices that have squeezed consumer wallets all year, many Americans are already getting back to pre-pandemic levels of holiday traveling and spending. Consumers are expected to spend an average $832.84 over the holiday season, according to forecasts from the National Retail Federation. The amount is on target with the past years, even as dollars may not stretch as far this year, thanks to inflation.
As a result, some Americans’ holidays may look different this year. Maybe you’ve been planning ahead and saving for the added costs the holiday season brings, you’re rethinking some old traditions, or you’re tightening your budget to make room for higher-priced food, gifts, and travel.
Here’s how four families across the country are approaching their holiday spending a little differently this year:
Year-Round Holiday Saving
Last year, Dennis Shirshikov, 32, from New York, didn’t have a financial plan going into the holidays.
The stress that caused Shirshikov and his wife inspired them to spend this year putting money away each month toward their holiday spending.
The family budgeted $500 a month, for a total of $6,000 to cover the costs of gifts for family, friends, and their three young kids, as well as pet and home costs through the holiday season. They’ll also maintain traditions like hosting family and friends this season, who they also enjoy gifting party favors.
But even though the Shirshikovs are financially prepared, they’re determined to give more mindfully this year, too.
“A lot of our close friends are worried about their jobs and they’re worried about their situations,” says Shirshikov. “We’re trying to be a little more cognizant [with] gifts that are going to be a bit more useful in the long run.” In the past, he gave a lot of gag gifts to make friends and family laugh, including a mini golf putting set designed to play while on the toilet.
And inflation is a concern, too. Of the $6,000 saved, Shirshikov says they hoped to only spend $4,000 of what they saved throughout the year. But with inflation, they’re bracing for the potential that they may need to spend the entire amount.
Emily Waddell, a 26-year-old living in Seattle, and her husband have also forgone having a financial plan for the holidays in years past.
Gifts for both sides of the couple’s families quickly added up. “It was just excessive, like, we need to figure out a way to rein it in,” she says.
Now, Waddell manages her budget by keeping track of her holiday spending.
She created a spreadsheet with all the family members and friends she and her husband plan to exchange gifts with, and assigned each person a dollar amount, taking into account last year’s holiday spending and costs. She saved $1,200 in a high-yield savings account to prepare.
But Waddell, too, is feeling the pinch of higher prices. She’s focusing on finding deals and discounted items, as well as focusing her money on supporting small businesses and shopping as sustainably as possible.
“This year, we’re waiting to buy things during the sales,” says Waddell. “I’ve got a little list going. I think we can still definitely work within our budget, but I would definitely be more conscious of how we buy everything.”
Focus on Quality Time
With more than 47 people on her list, holiday spending can quickly add up for Nicole Booz.
The 32-year-old from Pennsylvania and her husband typically track their holiday spending and use that as a baseline for the following year’s budget. This year, that meant setting aside $750 per month, which she automatically transferred to a savings account.
Despite inflated prices throughout the year, Booz says she was fortunate enough to not have to cut other areas of her budget to meet the goal.
But she’s still spending the money she saved for the holidays differently.
“This year, I really wanted to cut back on the number of people we were buying for or the amount we were spending on each individual person,” says Booz. The increased prices of everyday items mean she has to be more mindful of the amount she’s spending.
As an alternative to gift-giving, Booz says she plans to allot more of the money toward quality time with loved ones.
“This Christmas, I’m hosting my whole family at my house … instead of spending hundreds of dollars on Christmas presents,” says Booz.
The celebration will include a Secret Santa gift exchange with a $50 limit. And instead of spending $50 per niece or nephew, she’s sticking to a $10 budget per child. As for her own kids, she’s not letting the pressure to overspend weigh on her budget either.
“I feel like there’s a lot of pressure on Christmas to get your kids these big toys,” says Booz. “We’re actually not doing that. I’m just getting them a couple of small gifts that I know they’ll like.” She says she’s already scored a few good deals by keeping an eye out early.
And saving throughout the year has helped to make holiday shopping less stressful for her.
“When you have the money set aside, it’s not as stressful,” says Booz. “It’s actually kind of fun to do and you’re not worried about affording it or how you’re going to afford other things.”
Get Creative With Gift Giving
Deborah Miranda, from Seattle, spent years not budgeting for the holidays.
“In the past, I would just fly by the seat of my pants and not prepare,” says Miranda, 52. But recently, she’s started planning ahead.
Miranda uses a savings account sinking fund to cover the cost of gifts for her four young adult children and loved ones. She uses the money to buy family gifts, something for herself, and random acts of kindness for others.
“That way I know that I am intentionally spending the money the way I want to spend it and not getting into debt,” says Miranda. This year, she calculated more due to inflation, but she says the economy is causing her to stretch her savings a bit more than expected this holiday season.
Whenever anyone comes across extra change or cash, Miranda and her family put it in a jar. On the first of November, they count the money and vote as a family how they will spend the holiday savings. “So if that meant a tree or a new ornament, getting pizza, going out, whatever,” that’s what they do, Miranda says.
On average, she says the family has been able to save $486 each year this way.
The family will also have a smaller celebration than in the past. Miranda plans to gift baked goods and, as gifts, contribute to her kids’ Roth IRAs which she opened a few years ago.
“It’s probably going to be something that I do this year, and maybe some smaller gifts,” says Miranda. She encourages consumers to give kids money in any form except cash. “They may not appreciate it right now. But little by little when they start contributing to it themselves, it’ll be more meaningful.”