Holiday debt often carries into the new year, weighing you down when you’re trying to make a financial fresh start. In the spirit of new beginnings, we’re unpacking simple ways to avoid it altogether. Read on for some helpful tips.
1. Revisit your budget.
A strong budget is the foundation of financial wellness. Without it, you can easily fall into a pattern of overspending. Budgeting doesn’t just factor in your income and regular bills — it also makes room for non-monthly expenses that crop up throughout the year. Holiday spending fits squarely into this category. With the holidays right around the corner, have you planned ahead for things like gift giving, decorations and travel? Having wiggle room in your budget to accommodate these things can help you avoid relying on credit cards.
If money is tight, see if there are any short-term sacrifices you can make. Meal planning, brewing coffee at home, and curbing your discretionary spending can all free up money you can put toward the holidays.
2. Change your approach to gift giving.
During the 2019 season, 67% of shoppers spent most of their holiday money on their children, according to a BlackFriday.com survey. Spouses and partners were right behind them. Now might be the time to rethink your approach to gift giving. If getting certain holiday presents for your kids feels like the most important thing, one solution is to chat with your partner about skipping gifts between the two of you. Maybe a festive date night during the holiday season could be just as special (and less expensive). As for the kiddos, consider setting a spending limit for each child and comparing retailer prices to find the best bargains.
3. Opt for online shopping.
It may be best for your wallet to do your shopping online Notre Dame researchers found that impulse purchases increase the longer consumers are in a store. The idea is to get in and get out without being tempted to splurge on other things. Plan ahead in terms of who you’re shopping for and what you’re buying. Then compare prices from different retailers to find the best deals. Shopping events like Black Friday and Cyber Monday are largely available online.
4. Use cash whenever possible.
There’s lots of research suggesting that we’re more likely to overspend when using plastic. One study conducted by MIT Sloan School of Management found that paying with credit cards drives greater purchasing and essentially tells our brains to step on the gas. Even with the best intentions to pay off your balance when the bill comes due, that may not always be realistic.
Shopping with cash, on the other hand, might help you stick to your budget. That same MIT study found that cash purchases don’t activate the brain’s reward networks the way that credit cards do.
5. Make a plan to pay off credit card purchases.
There are some situations where using a credit card makes more financial sense. Lots of retailers offer discounts to customers who pay with their store card. Cash back credit cards and rewards cards can also help you snag additional perks. The key here is making a plan to pay off those balances in full each month.
This comes back to your budget. DailyPay provides on-demand access to your earned pay so you can stay on top of your bills. This way, you don’t end up missing a payment while waiting around for payday.
6. Take advantage of sales events
There’s a lot of hype around holiday sales events, but some of them may be worth it. The average Black Friday savings is 37%, according to SpendMeNot. Take a look at your shopping list to clarify what kinds of things you’re looking for, then see if they coincide with any retailer discount events.
Toys, electronics, apparel and home goods are usually front and center on Black Friday. Retailers like Amazon, Target, Walmart and Best Buy are good places to start. You might also find deals on TVs, furniture, household items, Apple products and more on Cyber Monday.
If you do accumulate some holiday debt this year, don’t beat yourself up. The best approach is to add it all up, then make a plan for paying it off as soon as possible (especially since high-interest credit cards can be a killer). DailyPay can help you cross the finish line by providing access to your earned pay whenever you need it.
