I’m a Money Expert: 3 Reasons You Should Save Ahead of the Holidays in 2024
Written by
Jennifer Taylor
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Amen Oyiboke
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The holidays only come once a year, and your bank account might be grateful for that. Being financially prepared for the happiest season of the year is always wise, as expenses tend to skyrocket in December.
Consumer spending is expected to reach a record-high average of $902 per person during the 2024 winter holidays, according to the National Retail Foundation. This includes gifts, food, decorations, and other seasonal items.
“Saving a little more before the holidays makes sense for so many consumers,” said David Flores Wilson, a certified financial planner and managing partner at Sincerus Advisory. “Consumers should look at last year’s holiday spending habits by digging up old credit card and bank statements and comparing that to a typical month.”
He said you should use that to determine how much extra to save.
“If they spent 20% more than the typical month during the holidays last year, that’s the amount they should save ahead of the holidays,” he said. “If that’s not realistic, the goal should be to make up for the extra spending by saving more in January.”
While the amount you should save ahead of the holidays will differ for everyone, the reasons for doing so are the same.
Here’s why you should go into the holiday season with money saved.
Balance Out Overspending
“Around the holidays, so many people throw out the financial discipline they’ve kept going for most of the year,” Wilson said. “It’s normal to have a spike in spending between Thanksgiving and New Year’s, given the increase in travel, gifts to buy for family and friends and holiday parties to attend and host.”
An increase in expenses, combined with a more relaxed end-of-the-year attitude can add up fast.
“For a segment of the population, the mindset that the hard work for the year is done can unfortunately creep into spending habits, as spending in all categories can increase during this time,” he said.
Ease Into the New Year
“People are stressed out and tired during the holidays, so emotional spending increases, and many people have an ‘I’ll deal with it next year’ mindset,” Wilson said. “Our advice is for people to plan around this natural tendency to spend more around the holidays by saving a little extra right before the holidays, and not put so much pressure on reverting back to good habits on January 1st.”
Having some extra money saved can allow you to spend a little more during the holidays, without the stress of having to start the new year on a tight budget.
Pay Holiday Credit Balances Immediately
“Saving money ahead of the holidays and using that money for purchases will enable you to pay off your credit card purchases immediately, versus having to carry a balance,” said Mike Hunsberger, certified financial planner and owner of Next Mission Financial Planning. “With average credit card interest rates at about 20%, charging $1,000 and paying it off over a year could cost you an extra $200.”
He said avoiding those interest charges is essentially putting money into your pocket.
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