Thanksgiving traditions are built around the dinner table. It’s a harvest holiday all about food, after all!
Between carving the turkey and breaking the wishbone, there’s time to pile on seconds while you navigate conversations with your extended family.
While these overindulgences at the table might blow your diet, they’re merely appetizers to the holiday’s biggest excesses. The true main course for savvy shoppers is Black Friday and Cyber Monday. Those hungry for deals leave their leftovers behind for the malls and digital checkouts.
As a lender and servicer of short term loans online and your source for financial know-how, we want to remind you that any excess at the till may blow your budget.
Think your finances can handle the pressure? The odds might be in your favor when you heed these Thanksgiving weekend tips.
Holiday Spending Tip #1: No Gift is Worth Debt
When there’s not a lot of wiggle room in your budget, the holidays are a stressful time of the year. You don’t want to be a Scrooge, but you may simply not have the cash to spoil your loved ones.
So you turn to credit cards and other online loans to help fill in the gaps, borrowing money to afford all those gifts, parties, and meals.
What is a little holiday debt if you and your family get to have an amazing celebration, right? Well, it could be a decision that rocks your finances for months, if not years, to come.
According to a 2019 holiday survey from MagnifyMoney, the average American went $1,325 in debt from holiday spending in 2019.
When asked how long it may take them to climb their way out, 78 percent of respondents said they wouldn’t be able to to pay off their holiday bill by January.
Only 22 percent would pay off their debt in one month.
Now think to yourself: will the season’s hottest toy last that long?
Knowing the speed schoolyard trends fall in and out of fashion, you can’t bet on it. Your children will probably grow out of any gift long before you pay off the debt by making the minimum payment. This may be the case with any present or experience you share with the rest of your family.
Although it may be challenging to adjust your expectations for the season, paying off holiday debt is a lot harder than shopping around a small budget.
Remember this the next time you think about borrowing money to fund the festivities: it’s just not worth it!
Holiday Spending Tip #2: Save Early
Avoiding the hangover of holiday debt is easier when you plan your budget around holiday spending.
Some experts suggest setting aside one percent of your annual income for holiday spending. These savings should cover everything from gifts, decorations, and food to parties, travel, and other miscellaneous costs of the season.
At just one percent, this standard helps put your holiday spending in perspective. You shouldn’t be dropping a huge amount of cash on the festivities.
It also teaches you another lesson: your spending should be scaled to your finances.
While one percent might look like a thousand dollars for someone earning six figures, it may be half of that (or less) depending on how much you earn.
Of course, it’s important to note that this one percent is just a suggestion. How much you end up saving depends on your plans and your financial abilities.
No matter how much you earn, the earlier you start squirreling away money, the easier it will be to hit your target.
If you begin saving in March, you have around eight months before the Thanksgiving weekend, with another full month until the winter holidays proper.
If your target is $400, you would need to set aside less than $50 a month to reach your goal.
But let’s say you forget about the holidays until October. You would have to save $200 each month to reach the same target.
Remember this for next year if you find yourself in a crunch. There’s no such thing as preparing too early!
Holiday Spending Tip #3: Create a Holiday Budget
Whether you can afford to break this rule depends on your household budget — and, more specifically, your holiday budget.
A goal of one percent on paper will mean nothing if you don’t check in with your spending plan to see what you can practically afford.
A budget paints a picture of your spending habits. In broad strokes, you’ll be able to see if you spend more than what you earn each month. Close up, you’ll see which spending habits are the reason why you’re overspending.
By targeting these bad spending habits, you might be able to get your finances on track. You might even be able to tweak your budget to hit your savings target of one percent.
Start by tracking your expenses and divide them into two categories: needs and wants.
Your financial needs cover the essentials that you need to live — things like food, housing, and medication. They often end up being fixed expenses, too. But this isn’t always the case.
The differences between fixed and variable expenses hinge on the frequency of your bills. If you can expect to pay the same amount on a regular schedule, your need is a fixed expense. If there’s some fluidity to your bills, it may be a variable expense — and could be more of a financial want.
Your financial wants are the frills that bring fun or comfort to your life — things like takeout, vacations, and household decorations.
These things are prime pickings for savings. Small changes you make to this spending category may free up a surprising amount of cash for holiday spending.
Let’s take a look at some of the most common frills to see how much you might earn when you slash them from your holiday budget.
- Takeout Coffee: A lot of Americans love their morning cup of joe, so the idea of cutting out your morning trip to the nearest coffee place might sound hard. But by brewing your coffee at home, you can likely save hundreds of dollars over the course of a year.
- Gym Memberships: While maintaining your physical health is important, gym memberships don’t typically come cheap. Drop the weight from your budget by trading the gym for an at-home fitness routine.
- Cable: It may be the golden era of TV, but you don’t need cable to watch award-winning shows. With streaming subscriptions costing a fraction of the average TV package, you can cut the cord, save money, and still catch your favorite shows.
- Subscribe Carefully: A lot of people add to their budget by subscribing to things like Netflix, Hulu, and Spotify. Make sure you trim these services down to the bare minimum to see the greatest effect on your cash when you cut the cord.
If these tips don’t work for you, look to your budget to find something that fits. There’s more than one way to cinch the belt buckle of your budget, after all.
Every budget is different, so expenses aren’t the same for everyone. If you’re in school, your student budget is likely a lot different from your parents. However, the budgeting tips for college students and professionals tend to share the same advice at heart:
Track your expenses to see which ones you can afford to put on the chopping block.
Whether you’re a freshman or a 30-year alumnus, we recommend you read about our Key Thinkers Scholarship winner’s take on financial responsibility.
They suggest you assign a task to any cash you manage to save by cutting wants. As far as tasks go, your priority will be making sure you meet your needs. You should cover the big things like rent, food, and any cash loan payments before you funnel money into holiday spending.
If there’s anything left over, this is your expendable cash to use as you wish.
Here you have another important decision to make. Do you take this cash to the malls this weekend, or do you save it away in an emergency fund?
Although it may seem like preparing for the holidays is your priority, an emergency fund takes precedence. It helps you weather financial emergencies when you find yourself short on cash, giving you some wiggle room without relying on loans to cover unexpected expenses and repairs.
By splitting your cash between the holidays and your savings, you may have the best of both worlds: some extra spending money to splurge on loved ones and a growing safety net to help you in emergencies.
If you find your emergency fund falls short in the face of unexpected expenses, a cash advance may be a good option in an emergency. Take some time to read up on how a cash advance works to see if it’s the right solution to your cash-flow problem.
Holiday Spending Tip #4: Make a New Thanksgiving Tradition
Worried your budget will go out the window as soon as you see the first sale? It’s a reasonable concern.
Between waking up before dawn, waiting in increasingly long lines, and working your way through the aisles, your patience and critical thinking skills may take a hit this weekend.
As other shoppers froth themselves into a frenzy over Black Friday prices, it’s all too easy to match their excitement. You can get carried away and grab costly gifts which are not on your list.
It’s difficult to keep calm and collected when you’re out shopping, but don’t assume you’re safe from impulse buys by staying home and shopping online.
Banners which are counting down the minutes until the sales end and the items go out of stock do the same thing to your brain. These conditions can trick you into overspending during the holidays.
If you aren’t sure you can withstand the pressure, don’t participate!
We admit this ticks the proverbial “easier said than done” box perfectly. Nevertheless, it’s a valuable tip that may protect your budget from holiday shopping better than anything else on this list.
Instead of organizing your weekend around mall opening hours, fill it with fun things that keep your mind off the sales.
What will your new Thanksgiving tradition be? Why not try:
- Choosing an affordable fall craft the whole family can do
- Have a game or a movie night with the family
- Exploring the outdoors — remember to pack Thanksgiving leftovers in a picnic!
These fun activities may provide the distraction your budget needs. By keeping yourself occupied and away from the checkout (digital or otherwise), you stand to keep your cash where it belongs.
Thanksgiving shopping can blow through your budget like a hurricane, leaving financial wreckage in its wake.
Batten down the hatches by following our tips. Between setting appropriate expectations and starting new traditions, they’ll help you celebrate without sacrificing cheer.
And remember, if an unexpected emergency expense threatens to upset all your hard work, find out where to borrow cash when you need it. An online loan may be a safety net when your savings fall short.
Posted in: Holiday Tips