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.
“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.
“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.”
Budget: 20 Ways to Pay Less at Costco
Next, Look At Your Estimated Gift Spending Before Making Any Actual Purchases
Thanks to online shopping, you can easily see how much every gift on your holiday shopping list will cost before you make any purchases.
“It’s important to make a list with each item’s cost listed out so that you know what your overall spend will be and can adjust it to ensure the cost fits within the budget you set,” said Mike Cocco, CFP. “It’s easy to keep adding to your shopping cart — especially when online shopping — but a list helps hold you accountable.”
Get a Head Start on Shopping So You Have Time to Comparison Shop
“The holiday shopping season has started early, so get a head start on holiday shopping by starting now,” Cocco said. “Don’t forget to compare prices where you can to ensure you’re getting the best deal.”
Use Promo Codes and Cash-Back Offers To Save When Online Shopping
“Spending just two minutes searching for a code or cash-back offer can save you up to $20 during the holiday season,” said Sara Skirboll, shopping and trends expert at RetailMeNot. “Using sites like RetailMeNot to find the best deals is always a great strategy. Additionally, you can see which brands might be offering cash-back offers.”
Look Out for Special Deals on Social Media
Be the first to know about sales by keeping up with your favorite brands on social media.
“Follow your favorite stores and businesses and keep an eye out for when they post special deals for their followers,” Skirboll said.
Don’t Feel Pressure To Buy Your Kids Super-Pricey Gifts This Year
When it comes to buying gifts for your kids, “set expectations early,” Cocco said. “Now is a good time to help your kids understand money and become more financially literate with the current economic stressors and conditions. Instead of going into debt over buying the latest cellphone, explain the importance of long-term savings and debt management.”
Remember That More Expensive Gifts Aren’t Necessarily Better Gifts
When it comes to gift-giving, it really is the thought that counts — not the price tag.
“Consider opting for thoughtful gifts that don’t necessarily cost an arm and a leg, such as photo albums or charitable donations,” Cocco said.
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.”
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.
Cash In on Your Credit Card Rewards
“The holidays are a good time to take a look at your credit card rewards,” Cocco said. “Many credit cards offer cash rewards, which you may consider using for your holiday purchases.”
More From GOBankingRates
- Get at Least $800 in Value from this Credit Card Signup Bonus
- Social Security Benefits Might Get Cut Early — What Does It Mean for You?
- How To Use a Credit Card Like a Pro This Holiday Season
- How To Refinance a Mortgage
Last updated: Oct. 25, 2021