Don’t Let Inflation Bust Your Holiday Shopping Budget
Overall, the price of consumer goods has increased 5.4% since last year, according to the consumer price index, which means this holiday season will come with an added cost.
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“With inflation up 5.4% from last year, consumers are entering one of the priciest holiday seasons during a time when most of them can’t afford it,” said Howard Dvorkin, CPA, chairman of Debt.com. “The pandemic caused many people to stretch their finances, and this holiday season will ask them to pull even further.”
Fortunately, there are things you can do to tackle the high prices and keep inflation from busting your holiday shopping budget.
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Plan Ahead
“To make sure you spend properly, you have to plan properly,” Dvorkin said.
This includes figuring out exactly who you will be buying gifts for before you enter the store or start browsing online.
“Let’s face it, no one enjoys creating a budget — especially for a pleasant task like showering everyone with gifts,” Dvorkin said. “But it’s crucial if you don’t want your holiday cheer turning into a chore. The first step is making a list and checking it twice. Exactly who do you need to buy gifts for? Really put some thought into this, because you’re making a promise to yourself that this is it — you’re not buying anything more for anyone else. We’re not yet talking what you’re going to buy these folks, just that you want to — or in the case of a boss, maybe need to.”
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Avoid Impulse Purchases
When you’re holiday shopping in stores — or even online — you’re constantly being bombarded with appealing sales and deals that seem too good to pass up. But if the item won’t check a specific person off of your gifting list, don’t buy it.
“Stick to your budget and your list,” Dvorkin said.
Giving in to impulse purchases is what lands people in debt during the holidays.
“Over the years, studies have consistently shown something interesting — in general, people who don’t go deep into debt spend around 1.5% of their gross annual income on holiday spending,” Dvorkin said. “These people don’t make impulse buys.”
Don’t Hoard
During the holidays, some stores will have “buy more, save more” promotions or sell certain gifts in bulk. But once again, you should refer to your list and budget and avoid buying anything you don’t actually need.
“Just because something is on sale doesn’t mean you should buy it — or a hundred of it,” Dvorkin said.
Shift Your Spending Habits
Find ways to cut back on your discretionary spending ASAP so that you will have more wiggle room in your budget for holiday gifts — especially given the higher price of many items this year.
“Develop money-saving habits, like eating in or shopping from the sale rack,” Dvorkin said.
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Last updated: Oct. 25, 2021
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