Whether or not you’ve broken into the festive spirits yet, the holiday season is officially upon us. Its time to don your ugly sweater and start blaring Mariah Carey.
Chances are, wherever you live in the world, Thanksgiving, Christmas, New Year’s Day, Hanukkah, and Kwanzaa will be different this year. But I’m willing to bet that no matter what your celebrations look like, they’re still going to be expensive.
Analysis by the Bank of England suggests that the average UK household spends an extra £800 (equivalent to just over $1,000) in December, primarily on food, alcohol and gifts for friends and family. Events such as Black Friday and Cyber Monday, which have taken off in the UK in recent years, mean the average household is now also spending more in November.
According to Gallup, festive spending in the US is broadly similar — but perhaps unsurprisingly, 28% of Americans are looking to spend less than usual this year.
Lydia Saad, Senior Editor at Gallup writes,
“Americans predict they will spend an average $805 on Christmas gifts this year, significantly below their estimate a year ago ($942) and the lowest October holiday spending projection Gallup has measured since 2016.”
If, like me, you’re trying to keep costs down this holiday season, here is my tried and tested advice.
1. Plan ahead
This is a boring recommendation that I’m sure you’ve heard everywhere, so I will keep it brief. Nonetheless, it is the foundation of maintaining control over your cash this holiday season.
Start with the big number; how much, realistically, are you willing to spend?
Then make a list of who you need to buy for, and order or group those people by most expensive to least expensive.
Make sure to add food, booze and decor to that list. If you might be travelling to loved ones, don’t forget to factor in travel costs.
Now for the hard part. Assign everyone and everything a budget, and make sure it doesn't exceed your maximum amount. If money is tight, spend some time thinking about where you can sacrifice on tradition — without being a Grinch, you won’t enjoy the holidays nearly as much if you’re ringing in 2021 with a heap of debt hanging over your head.
Once you have allocated your money to each of your festive priorities, that’s your plan for spending this holiday season.
If possible, I like to always try and leave a little extra leftover. As with any budget, stuff comes up over the holidays. You might want to enjoy some spontaneous (take-out) gluhwein or realise on Christmas Eve that you’ve forgotten a gift for your uncle’s new boyfriend. It happens to the best of us! A little leeway in your budget will help you be prepared.
However big or small your budget, you can then look at how to make the absolute most of the money you’ve assigned to each element of your festivities — and this is the fun part.
2. A budget can make gifting more meaningful
Stop trying to impress people with expensive gifts. You don't need to.
Instead, consider setting a challenge with those you love.
A couple of years ago, my mother proposed we have a ‘£10 Christmas.’ The idea was, you can only spend up to £10 (roughly $13.36) on each person’s gift, and you have to try and be creative about it.
This has become my absolute favourite tradition. We love this, and we’ve done it every year since.
I’ve received books with personalised notes in the margins, homemade cooking oils and new Nutribullet blender accessories with ingredients to make my brother’s coveted smoothie recipes for myself. All were really touching gifts which I treasure and actually use. It's not just cheaper — it's more thoughtful and less wasteful.
Last Christmas, I sewed my mom a new makeup bag with some fabric I found and filled it with beauty samples I had collected throughout the year. She texted me updates for months as she worked her way through them.
If like me, you and your loved ones are in the privileged position of being able to afford the things you need, you may find a new appreciation for gifting by setting a spending limit, or even trying a ‘free’ Christmas, and gifting acts of service. £10 Christmas has truly encouraged us to be more purposeful with our gifts — something I’m more appreciative of every year.
If you have a massive family and gift-giving is not just expensive but also overwhelming, maybe suggest foregoing gifts for every family member, and having a ‘Secret Santa’ style Christmas instead. This way, everyone can buy one present for a family member they’re randomly assigned to (within an agreed spending limit) and you will all have more time to consider what you give each other.
Setting a mutual gift budget and re-emphasising the value of thoughtfulness with those you love can save you (and them) a tonne of money over the holiday season without compromising whatsoever on the joy of gifting.
3. Get creative with those you love (even if you’re terrible at crafts)
Especially this year, when COVID restrictions may mean you can’t enjoy a festive tipple out with your friends or a group outing to Santa’s Grotto, you need to make the most virtual festive experiences.
This week, I’m scheduled to take part in a virtual wreath-making class with some friends and a cheap bottle of prosecco. We’re DIY-ing wreaths we would otherwise have bought, supporting the local hospitality business running the class and posting out supplies (which is subsidised by a local public authority), and using it as an excuse to safely spend time together.
Even if you’re terrible at crafts (like me), have a go at getting creative with the virtual Christmas craft classes your local businesses are running.
A quick Google search will reveal all sorts of candle making, macrame and baking ‘events’ that are far cheaper than your usual Christmas night out. They’re also ridiculously fun, a fantastic way to support local independents impacted by the pandemic and a perfect activity to do with friends and family. You additionally get to make decorations and gifts that would themselves usually cost far more.
You may even find yourself a new hobby for 2021!
4. Research, research, research… then buy
Brands invest months of planning and spend billions of dollars on advertising their products to you over the festive period.
While The Guardian reports that brands will be spending £724m less than usual in marketing in the run-up to Christmas this year (as a result of the pandemic), media business correspondent Mark Sweney writes that “the annual Christmas advertising battle will be as fiercely fought as ever, with a total of £6.2bn spent across the fourth quarter.”
Research is your friend. Try to resist browsing, and don’t buy anything before doing your research first on what you want to spend on each of your festive priorities (be they gifts, food or otherwise).
Save up and keep track of discount codes you come across online, and those sent to you via mail and email so you don’t miss out on a deal. Make use of vouchers you may be given by your employer. If you can, (responsibly) use credit cards that will give you points or cashback on the money you spend.
When you know exactly what you want to buy, be sure to keep track of what you’re spending in a basic budget. Personally, I like a simple spreadsheet I’ll make especially for the holiday season. Whether it’s a spreadsheet, a note in your phone, a pen and paper budget or something else entirely, make sure you’re keeping track of what you spend against what you allocated to everything in step one.
5. Plan ahead for Christmas 2021
The holidays come around at the same time every year, meaning that you have a full year to save money in a sinking fund and take advantage of the perfect gifts you spot on sale from 1st January 2021 through to the next holiday season.
Take inventory of what you spend throughout this year’s festivities and use that as the basis of what you want to put aside for 2021 celebrations.
Then take that number and divide it by how long it will take you to save. If you’re spending the average $805 and want to spread your saving across the year, that's just $67.08 per month to get prepared for the next festive season.
There’s no right or wrong way to do this, but to help you stay on track, you may find this article on the financial habits I learned dating an accountant useful.
Saving a little every month won’t only mean you’re fully prepared for the next festive season, but also that you can pick up the perfect gifts when you see them on offer, using that holiday fund.
This is precisely how I picked up a giant, limited edition version of my friend’s favourite candle while it was on sale earlier in the year to gift to her this Christmas. I’m so excited to give it to her.
Remember what the holidays are really about
You’re not Ebeneezer Scrooge if you don’t want to spend $800 on the holiday season this year. Times are tough, and Thanksgiving, Christmas, Hanukkah, and Kwanzaa… whatever you’re celebrating, isn’t about the money. It's about celebrating your beliefs and traditions, gathering (safely) and appreciating those you love.
In fact, if £10 Christmas has taught me anything, sometimes spending less can be more meaningful.
I hope these tips help you have a fantastic festive season with those you love (in person or virtually) without feeling pressured to break the bank. The holidays are far more enjoyable when you’re not feeling guilty about the money you’ve spent.
If you want to try £10 Christmas or getting crafty but do have the resources to spend more, consider donating some of the money you save this holiday season to a charity or put it towards a big, safe family get-together post-COVID. The holidays are wonderful but it looks like we’ll also have a decent portion of 2021 to celebrate finally being reunited again.
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