In anticipation of increased holiday spending in 2023, financial experts recommend starting to save now to avoid going into debt. American families are projected to spend around $975 on holiday shopping, up from $875 in the previous year. To offset this large expense, it is essential to find hidden ways to save money and prevent the accumulation of credit card debt.
Setting spending limits and discussing gift-giving expectations with family and friends can help alleviate financial stress during the holiday season. Suggestions include opting for Secret Santa or white elephant gift exchanges in large families or friend groups. Creating a budget, sticking to it, and shopping sales can further help in managing expenses and maximizing savings for holiday gifts.
A sinking fund, such as a high-yield savings account, is an effective tool for accumulating savings for holiday expenses. The separation of funds in a designated account can prevent impulsive spending and ensure that financial priorities are met. Automating savings by setting up regular transfers to a sinking fund based on planned expenses can help individuals stay on track with their holiday budget.
For those who wish to avoid the temptation of spending their savings, putting money in a short-term certificate of deposit (CD) can be a viable option. CDs offer guaranteed interest rates and can prevent individuals from accessing their funds until the term expires. Shopping early and saving simultaneously can provide a balance between taking advantage of sales and maximizing interest earnings on savings for holiday expenses.
Shopping early can also allow individuals to benefit from credit card rewards and cashback programs, while spreading out expenses to avoid paying top dollar for gifts. Starting shopping early can help individuals take advantage of sales throughout the fall season and avoid the stress of last-minute holiday shopping. By adopting a balanced approach of saving and shopping early, individuals can navigate the holiday season without depleting their savings or going into debt.
