7 Holiday Expenses That Ruin Your Budget — How To Beat Them This Year

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After skipping most of last year’s holiday festivities, you may be eager to make up for lost time with an extra special holiday season this year. But in your excitement, it can be easy to spend more than expected — and land in expensive debt that lasts long after the tree is taken down. This year may be particularly hard, with prices rising because of supply chain issues and heavy demand. Consulting firm Deloitte estimates that holiday spending will average $1,463 per household in 2021. The cost of gifts is just one of many holiday-related expenses that can eat into your budget. It’s easy to overlook other costs that can quickly add up, such as shipping, traveling and entertaining. Deloitte expects the cost of experiences, including entertaining at home and socializing away from home, to increase by 15% this year, accounting for one-third of holiday spending.

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Here are seven extra expenses that are easy to overlook when preparing financially for the holidays. The following strategies can help you manage and reduce these costs — and make it easier to start the new year without the drag of holiday debt.

Make Your Money Work for You

All the Extra Gifts

You’re ahead of the game if you have a gift budget for your key family members and friends. But it’s easy to overlook the cost of the extra gifts for others in your life — such as teachers, coaches, hairdressers, babysitters, delivery drivers and friends you visit over the holidays. Don’t forget these expenses when setting your holiday budget.

“The most important step is to craft a budget you can afford,” said Josh Miller, senior vice president at KeyBank. “Map out how many people you are buying for and how much you hope to spend per person.”

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Looking back at last year’s expenses can help you remember some of the unexpected costs. “Review your credit card statement from last holiday season to understand how much you spent and outline different expenses you took on that you didn’t expect. This can give you a guideline on how to prep your budget for this coming season,” said consumer-savings expert Andrea Woroch. “This includes writing up gift ideas for the different people in your life with an approximate budget per person. Just make sure you’re tracking how much you spend throughout the season since it’s easy to overlook the total amount when you aren’t paying attention and then blow your budget.”

Make Your Money Work for You

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Missing Out on Better Deals

If you plan to do your holiday shopping at a certain time — whether it’s Black Friday or the weekend before Christmas — you could miss out on big opportunities to save. Create a list of gifts you want to buy this holiday season, and start monitoring the prices now.

“Make your shopping list ahead of time. Note which products you want to buy as well as where you want to shop for them and the prices you expect,” said Julie Ramhold, consumer analyst with DealNews.com. “This is especially useful for Black Friday and Cyber Monday planning, as it’ll give you a chance to compare and contrast what retailers are offering.” She recommends checking the retailers’ sites on a regular basis and grabbing good deals when you find them.

You can also take advantage of tools to help you track prices. “Now that you know what you’re planning to buy this holiday season, start tracking prices and deals to make sure you don’t miss out on better prices,” Woroch said. “Since retailers regularly fluctuate, tracking sales with tools like Amazon Assistant or Honey’s DropList can help you score your gifts at lower prices without having to do much deal hunting on your own. These tools alert you when something on your wish list goes on sale. Before you check out, always search for a coupon aggregator like CouponFollow.com, which organize deals by store name so you can pull up current offers quickly.”

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Paying Too Much on Shipping Costs

It’s easy to shop online for the holidays, and you may find some competitive prices. But don’t forget to factor shipping costs into the price of the items, especially if you’re tempted to pay more for expedited shipping after post office slowdowns this year. Those costs can quickly add up.

“You may be able to find the right online sale but be hit with a shipping expense you didn’t expect that may eat up more of your budget than you can afford,” Miller said.

Plan ahead so you’ll have more time for shipping without having to pay extra for the service — which might not arrive on time anyway. “Consider skipping expedited shipping,” Ramhold said. “Massive shipping delays are expected — many of us are already seeing them, in fact — so unless a retailer is offering a guarantee that an item will arrive on time (and a solution if it doesn’t), it’s best to avoid the extra cost.”

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“Shop in person when you can,” she added. “Shipping costs will always be slightly higher around the holidays, and this year is no different with USPS specifically increasing prices through December 26, and other carriers upping charges because it’s a peak time for shipping. Sometimes you won’t be able to avoid shipping, but if there’s a chance that you can shop items in person and eliminate the worry of shipping costs, that’s definitely a strategy to use this year.” You can also take advantage of online shopping with in-store pickup.

You may save on shipping costs with some special programs, such as Amazon Prime and Target’s free two-day shipping. But don’t forget to compare the overall prices — free shipping may not come out ahead if you’re paying more for the item — and factor in any required membership fees. Also, resist the temptation to buy more just to qualify for a free shipping threshold without planning for the extra purchases in advance.

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Expensive Holiday Travel

You may be traveling to see relatives this year after doing a Zoom celebration in 2020. In your excitement to see relatives in person, don’t overlook some key strategies that can help you reduce the cost of travel. Air fares are generally least expensive two to six months out, said David Slotnick, senior aviation business reporter at The Points Guy. Since that time has passed, buying more than a month out is best, because prices can spike the closer you get to the date of travel, he said.

The timing of your travel can make a big difference, too, especially during expensive holidays. “Typically, especially on routes with lots of business travelers, your best bet is to avoid traveling on Monday, Thursday or Friday,” Slotnick said. “Those are often peak business travel days, though in big leisure routes – think flights to Orlando – you may see that prices are highest Friday afternoon, Saturday morning, or Sunday evening. Traveling on the off-peak days might be cheaper.”

He recommends testing several options to find the best deal, especially if you have some flexibility. “The best thing to do, if your travel plans are a bit flexible, is plug in your home airport, destination and dates to Google Flights and play around with dates to see if there’s any cheaper combination,” he said. “You can also use Google Flights to track prices and set alerts, and to see historic price trends on some routes.”

He also said that this is a good time to use rewards points. “The holidays are peak travel time, so prices tend to be at their highest. Using rewards points you have saved up can help offset the costs, or using a rewards card that earns a bit of a rebate,” he said. “Also, check the list of benefits on any credit card you already have – a lot of them come with rental car perks that can actually save you a lot.”

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Traveling With All of the Gifts

Airline baggage costs can also add up, especially if you’re carrying a lot of bags filled with gifts. It’s worst if you arrive at the airport and suddenly discover you have to pay extra for the bags. “You can typically get a discount for paying for checked luggage when you book your ticket, or when you check in the day before your flight, instead of doing it at the airport,” Slotnick said. “You can also usually get a first checked bag free if you have that airline’s co-branded credit card, or elite status through the loyalty program if you’re a frequent flyer.” Also consider shipping the gifts to your home afterwards, especially if you don’t need them by a certain time, but be careful with shipping costs, too.

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The Cost of Entertaining

If you’re having a holiday party, hosting a holiday dinner, or even just having relatives stay in your home, be prepared for even more expenses. It’s easy to overlook the cost of having guests during the holidays when you’re focusing on the cost of presents instead. And don’t forget the added cost of groceries if you have friends or relatives staying at your house for a while, in addition to the cost of the main meal.

You may have even more grocery expenses this year if you have to travel to a few stores because some items are out of stock. Start planning in advance, using some of the same strategies as you do for gift buying. “If you are hosting, keep an eye on grocery-related coupons and sales,” Miller said. If you make a list a week or two ahead of time you can start buying nonperishable items when they’re on sale. That can also help you avoid the last-minute grocery store rush.

Child Care Expenses

If you’re going to a lot of holiday parties or events, don’t forget to factor any babysitting costs into your budget. “Parents tend to spend more on childcare during the holidays to attend company parties and evening celebrations and festive dinners with friends,” Woroch said. But there is a savings strategy that’s also fun for your kids. “To save on this added cost, find another family to swap babysitter services. Not only will it save both of you money, but your kids will enjoy having other playmates.”

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About the Author

Kimberly Lankford has been a financial journalist for more than 20 years. As the “Ask Kim” columnist at Kiplinger’s Personal Finance Magazine, she received hundreds of reader questions every month about insurance, taxes, retirement planning and other personal finance issues. Her financial articles have also appeared in the Washington Post, U.S. News & World Report, AARP Magazine, Boston Globe, PBS Next Avenue, Bloomberg Wealth Manager and Military Officer Magazine, and her syndicated columns were published regularly in the Chicago Tribune, Denver Post, Baltimore Sun and other papers.

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