How To Budget For the Holidays When Living Paycheck to Paycheck

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Hanging by a financial thread is more common than you think — and not just for low-income earners. According to a joint study from Lending Club and PYMNTS, nearly 3 out of 4 Americans earning under $50,000 live paycheck to paycheck, as do 53% of those earning $50,000-$100,000 and even 40% of those pulling in six figures.

We’ve Got You Covered: GOBankingRates’ Smart Holiday Spending Guide
Helpful: How To Decide on a Holiday Budget That Works for You

More than half the U.S. population — 125 million American adults — is living just one payroll period away from financial calamity. For them, the holidays are one great, big ball of stress — but they don’t have to be. Even if there simply isn’t any wiggle room in your budget, 2021 can still be a season to remember. 

Prepare: Shipping, Wrapping & More Extras To Account For in Your Holiday Budget

Get Real With the Ones You Really Care About

If you’re living just one paycheck away from financial disaster, then a lot of the most common money advice about budgeting for the holidays simply doesn’t apply to you — don’t try to force it.

Make Your Money Work for You

“Skip the budget,” said Tanya Peterson, vice president of brand at Freedom Financial Network in San Mateo, California. “That may seem like the worst personal finance advice ever, but if you truly are living paycheck to paycheck, you don’t have money to budget on anything extra.”

Check Out: Your Complete Guide To Getting Ahead and Saving on Holiday Shopping

The best thing to do is to get on the same page early on with the core group of people in your life who make the holidays worth all the stress. You might be pleasantly surprised to find that you’re not the only one who would rather keep things low-key.

“Deliberately discuss and decide on your vision for your holiday with your spouse/partner/family,” Peterson said. “Most people really want the holidays to be primarily about spending time — not money — with loved ones, relaxing and, for many, taking part in the religious aspects. Family members will better understand and accept a more realistic situation with holiday gifts if they know everyone is working together.”

Make Your Money Work for You

Shopping Tips: Wrapping Paper, Greeting Cards and More Holiday Items to Only Buy at Dollar Stores

Put Your Gift List on a Diet

Trimming the fat on your shopping list can help to lower both costs and stress — who in your life, after all, should really expect you to buy them a present?

“One easy way to cut expenses during the holiday season is to streamline your gift list,” said consumer analyst Julie Ramhold with DealNews.com. “Do you have kids? Obviously, they take priority for gifts. Have a chat with your partner about whether you’ll gift each other anything this year, and place limits if you need to. It may be tough, but whittling your list down from those you want to gift to the most important recipients can help you to cut costs overall and potentially allow more meaningful presents for those closest to you.”

Important: The Ultimate Holiday Etiquette Gift Guide

Give the Gift of Something You’re Good At

You might still want to do something nice for some of the people who didn’t make the cut on your gift list. If you’re coming up light this year, consider the gift of service.

“With the holidays coming up, you may be able to gift someone your natural talents in place of a traditional gift,” Ramhold said. “Are you an impeccable cleaner? Offer to clean your friend’s house before they host their annual holiday gathering. If you’re good at baking, consider offering to make them their favorite treats — especially if they’re willing to buy the supplies. Do you enjoy sewing? You can consider offering something like alterations or simple tailoring to them for free, as well. However, remember that your time is valuable, too, so don’t let them take advantage of you just because you’re trying to do something nice for them.”

Tips: From Airfare to Gifts to Your Tree, How To Save on Every Aspect of Holiday Spending

Stretch Your Dollars With Homemade Gifts That Are Worth Giving

If your skill isn’t giftable, you — yes, even you — can make homemade gifts that people will actually be happy to receive.

“This can include baked goods like scones or cookies, but also items like homemade liqueurs or baking supplies,” Ramhold said. “There are easy recipes online for things like homemade limoncello, vanilla extract, and cherry liqueur.”

The trick is to pick a theme, focus on only that and save money by buying whatever supplies you need in bulk.

“While some of the basic ingredients may seem expensive, depending on how much you make, you’ll actually get a decent yield for these kinds of things,” Ramhold said. “Then you just have to bottle them up or opt for mason jars, which can be purchased at stores like Target for a reasonable price. For instance, a 12-pack of 8oz jars is around $9 at Target. Craft your own gift tags and stick those on top to tell your recipient what’s inside — consider including your favorite recipe that uses the item — and you’ll have a really lovely gift to give that was much cheaper than buying 12 individual gifts for your friends and family.”

Find: The Best Holiday Shopping Strategies for Your Wallet 

Ask For Help

DIY liqueur might be fine for the grownups in your life, but at Christmastime, kids want toys. If things are really tight, keep in mind that you can seek help from organizations that lend a hand on the holidays, including:

  • Walmart/Salvation Army Angel Tree
  • Toys for Tots
  • Lions Club
  • Catholic Charities
  • United Way Christmas Bureau
  • Prison Fellowship Organization
  • Samaritan’s Purse Operation Christmas Child
  • Make a Wish Foundation
  • Christmas Spirit Foundation

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.

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