The holidays are usually spent with family get togethers, food, and gifts but money is often thought about after so we are here to talk about ways to protect our financial future after the holidays.
There may be no work parties, no family gatherings, no shows, and no travel. but the good news is that the holidays won’t cost as much this year. PWC does an annual survey of holiday spending and these are some of the highlights. Now keep in mind that these responses are from August so the numbers were very different from what they are now.
- 57% of people said COVID has had a negative effect on holiday spending. 36% said no change. (That reflects that many people lost their jobs. But many just lost their commute.)
- 45% predict that their holiday spending will be less than last year
Which demographics are hit more?
Millennials will spend about $1200 which is the most of any demographic (vs $1,000 for Gen X and Boomers). Here’s a crazy number: Men expect they will spend more than women. $1300 vs $900. PWC believes this is in part because of the “she-cession” but the reality is that a lot of the job losses affected women.
What people will spend money on?
A different study from the US predicts:
- $650 on gifts
- $230 on other holidays items, like decorations
- $117 on non-gift items.
- For a total of $997. Which is about 5% lower than last year.
There will certainly be a big decrease in spending on travel due to restrictions. If you need to reduce holiday spending, the big category may be in gifts.
How to save money with gifts?
It requires a reset on expectations with people. If your spouse is used to getting an expensive watch every year, don’t just present them with a can opener. You need to talk about this.
You may need to talk with your kids and extended family to say “we need to cut back on gifts this year”. It is a difficult task, but critical. Do it NOW. Start with an ally, and pay attention to your family culture, that’s especially tricky when talking about the in-laws. Some families you can say, “Hey. Let’s cut back this year”. Other families need the light touch “Jeanine and I were talking…I don’t know. Remember that idea you had last year about cutting back?” Email or Whatsapp chats might not be the best path.
Advice for the millions of people who were unemployed or are unemployed now.
It is a brutal time for a lot of people. It is one thing to have to cut back March to November. But it is much harder in December when you think about how you’ve spent in the past, and have to hear about everyone else ordering all the “things” online.
My advice is simple and practical. And super annoying. “Don’t change the channel!!”
- Draft a budget: Gifts, food, charity. Total it up. Say it is $1000.
- Determine how you are going to fund it:
- Credit card debt.
- Cut back on liquor bill in January
- Eliminate the “gap”: You’ll have to play around with it a little.
Does it really need to be dire?
One of the opportunities of the pandemic has been a recovery of things. Hiking. Pajamas. What if this year was a reset. A creative exercise in making the holidays a real expression of what you value. “Necessity is the mother of invention.” This is a great year to invent something new.
Join the conversation