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Holiday sales are projected to reach $960.4 billion this year. Use these 5 tips to get your wallet ready for the season

What many consider to be the most wonderful time of the year can also be the most expensive. The holidays are around the corner, and if you haven’t started saving and budgeting for gifts, travel, decorations, and more—you could find yourself in a bind come year’s end.

Here’s how to make sure you have enough saved to cover all of your holiday expenses this season, plus a few tips from experts on how to set yourself up for success next year.

How much are Americans expected to spend this holiday season?

Even with inflation on the rise, many consumers are still prioritizing holiday spending.

According to the National Retail Federation’s (NRF) latest forecast, holiday sales are expected to rise between 6% and 8% from 2021 sales during the November 1 to December 31 holiday period. That translates to between $942.6 and $960.4 billion in sales. The NRF expects online and other non-store sales, which are included in the total, to increase between 10% and 12% to between $262.8 billion and $267.6 billion—up from $238.9 billion in 2021.

For some consumers, raking in savings even as prices continue to rise will mean shopping earlier or turning to alternative payment strategies.

A staggering 46% of holiday shoppers said they planned to browse or buy before November, according to NRF’s annual survey conducted by Prosper Insights & Analytics. And consumers have earmarked $832.84, on average, for gifts and holiday items such as decorations and food this season.

“Lower income households in particular are feeling the pinch of rising costs on everyday essentials, ” says NRF President and CEO Matthew Shay. “Many households are going to supplement spending with savings and credit.”

View this interactive chart on Fortune.com

Calculating your holiday costs

So how much do you anticipate spending this holiday season? The amount will ultimately depend on how you choose to celebrate and who you choose to celebrate with. When calculating exactly how much you’ll need to save to cover your holiday expenses, here’s how to start:

1. Revisit how much you spent last year

While some people are big spenders during the holiday season, others prefer to keep it low-key. Knowing how much you spent on gifts, travel, and celebrations last year can tell you if you’re on track to hit your savings goal for this year. “While inflation has been hot this year, it will give you an idea of how much you spent on gifts, and while you are at it, take the time to see if you are spending too much on gifts,” says Jay Zigmont, CFP and founder of Childfree Wealth.

2. Make a list of gift recipients

How many people are you shopping for this year? The number will likely make up the largest portion of your holiday budget if you’re not keeping a close eye on how much you’re spending per person—especially if you have a larger family or friend group. The best way to keep track of how much you’re spending, and on whom: Write it down.

“A three-column spreadsheet should do the trick,” says Herman Thompson, a CFP with Innovative Financial Group. “One column for the person’s name, one for the gift, and one for the cost. A cell in the spreadsheet that keeps a running sum of the cost column will help you keep track of your total spend. From there you can trim accordingly.”

3. Decide how you plan to celebrate

A small gathering with loved ones at home versus a family vacation abroad can significantly change how much you’ll need to save ahead of the holiday season. Make it a goal to settle on how and where you’ll celebrate the holidays early so that you can avoid paying steep prices for travel, rental cars, and accommodations, and have more time to scour the internet for deals. If you decide to keep it local, know that you will still need to budget for any party-hosting costs like food and decor, or host or hostess gifts if you’re attending someone else’s celebration.

Once you’ve crunched the numbers to see how much the season will cost you, use that to calculate how much you’ll need to save each month between now and the holidays. This will help you to plan ahead so you can comfortably cover your costs and avoid taking on debt or stretching your budget too thin to make it all happen.

5 ways to start saving for the holidays now

In a perfect world, you’d make it a habit to save for the holidays throughout the year. “The holidays come every year, so just put that amount away each month,” says Zigmont. Many banks are now offering a savings account with ‘buckets’ where you can put these funds.”

Saving year-round is a good way to lessen the blow of your holiday expenses. Say you set out to save $90 per month for holiday expenses. By the time the season rolls around, you’d have over $1,000 in your bank account to cover your costs. This might seem like an inconvenience in the short term, but it will likely be easier to manage than saving $270 per month in the last four months of the year.

Saving ahead of time isn’t always possible, especially if you have other pressing financial obligations. If you didn’t plan ahead this year, here’s how you can get back on track:

Create a holiday budget: Once you’ve crunched the numbers to figure out how much you spent last year, and you’ve finalized your holiday plans and gift list, you’ll want to create a holiday budget that breaks down that figure into a monthly savings goal. Remember: It’s okay if you need to reevaluate your holiday plans to make covering the cost more realistic. If the amount you’ll need to save feels like a stretch, go back to the drawing board and see if you need to rethink your gift list or opt for a smaller celebration.

Take a closer look at your current spending habits: If your monthly savings goal is just out of reach, look for ways to trim your monthly costs and put those savings into your holiday savings. “One of the easiest ways to save money is to trade food delivery fees for a warehouse retailer membership,” says Thompson. “Food delivery is convenient, but paying restaurant prices, delivery fees, and tips adds up quickly. Warehouse retailers offer high-quality food at competitive prices. You can fix your food at home and eat healthy while saving money.” Another tip to help boost your savings: Review your monthly subscriptions—you could be paying for unused or forgotten subscriptions.

Look for ways to increase your disposable income: If it feels like you only earn enough to cover the essentials, look for opportunities to earn extra income to help fund your holiday savings account. Consider picking up a side hustle in your free time or using this as an opportunity to clear out clutter in your home and resell.

Take advantage of sales: You don’t have to wait for the holidays to come around to start making purchases. Take advantage of holidays like Black Friday, Cyber Monday, and Small Business Saturday to save on gifts for your loved ones. You can also sign up to receive emails from your favorite retailers so that you never miss out on a sale or coupon. If you find that you spent less on a gift for someone than you had originally budgeted for, you could shift some funds over to a different part of your budget and have some extra money to cover the cost of travel or holiday decorations.

Set yourself up for next year: Finding yourself in a financial crunch is stressful, so do what you can now to set yourself up for next year. Shop around for the right savings account for your holiday savings and automate your deposits so that you can stay on top of your goals without adding another task to your monthly to-do list. Your future self will thank you.

This story was originally featured on Fortune.com

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