The festive season doesn’t have to bring financial strain when effective financial strategies are used to balance holiday spending and year-end savings.
At a Glance
- 46% of Americans are paying off last year’s holiday debt.
- Creating and sticking to a realistic budget is crucial.
- Holiday spending is expected to rise despite inflation.
- Strategies include avoiding credit card debt and leveraging retirement accounts.
Managing Holiday Spending
The holiday season often increases financial pressure, with many Americans still paying off last year’s debt. To navigate this, finance expert Dan Roccato suggests setting a clear holiday budget and categorizing spending into essential and non-essential expenses. This approach helps individuals avoid overspending and incurring credit card debt, which many consumers are currently facing issues with.
Roccato notes holiday spending will rise, with Americans projected to spend an average of $925 on gifts. Inflation hasn’t helped, with costs of traditional gifts increasing over the last few years. Considering this, many are resorting to emergency savings or delaying bill payments, leading to more financial strain.
Three ways to avoid holiday debt, according to "Money Glow Up" host @TheBudgetnista:
1. Create your game plan
2. Start saving early
3. Use smart shopping strategies pic.twitter.com/cw6fDycV6w— Yahoo Finance (@YahooFinance) December 3, 2024
Year-End Financial Strategies
Utilizing year-end financial strategies can protect against holiday overspending. Contributing to retirement accounts like IRAs, and utilizing flexible spending accounts can yield tax benefits and provide long-term security. Deferring income to the next year and practicing tax-loss harvesting at the year-end can also positively impact finances.
“The price of toys and other Christmas gifts are just simply more expensive than they were three and a half years ago, so that’s the first issue that Americans are grappling with.” – Dan Roccato
Financial expert Dave Ramsey recommends setting a Christmas budget to avoid overspending. This involves lining up every intended purchase and matching it with available funds. By adhering to this plan, individuals can navigate the festive season without accumulating debt.
Money-saving strategies to avoid holiday debt and stress https://t.co/Q1OyPgp6Ar
— KTVB.COM (@KTVB) December 20, 2024
Looking Ahead to Financial Health in 2025
Sound financial strategies include increasing 401(k) contributions, investing in personal skills, and reviewing insurance policies. Adding health savings accounts offers additional savings benefits. It’s suggested to create a dedicated account for future holiday spending, regularly contributing a small amount throughout the year to alleviate stress during the next holiday season.
“If you do that, and you put a name beside it, and then you total up those dollar amounts, you have what’s called a Christmas budget. If you stick to that, you won’t overspend.” – Dave Ramsey
These budgeting habits not only build a solid financial foundation for future years but also provide the skills needed to tackle upcoming economic challenges. With a proactive approach, the holiday season can be managed effectively, ensuring peace of mind and financial well-being.
Sources
1. 3 Strategies For Smart Holiday Spending That Won’t Break The Bank
2. Financial expert shares year-end money moves to tackle, avoid holiday credit card hangover
