The holidays are a joyous time, filled with love, laughter, family and friends. Nearly every home is illuminated with the scent of evergreen and baked goods. Our communities have an energy within them, bustling with the busyness of the Christmas season. Of course, it’s no secret that some of this holiday “magic” comes at a price – and with inflation, it can be a hefty price at that!
The vast majority of holiday staples are more expensive today than they were just two years ago. According to Bankrate calculations using Bureau of Labor Statistics data, holiday inflation is up more than 20 percent since February 2020. That means what cost $100 in 2020, costs $121 today.
Due to a combination of tempting holiday purchases and inflation, about half of Americans expect to take on debt to pay for the holidays this year, according to a 2023 Season of Spending survey. For some, it will take until next Christmas before the gifts under this year’s tree are fully paid off. Financial experts, however, have a few tips to stave off the financial setback.
Jason Gaughan, the head of consumer credit card products at Bank of America recommends: “Create a holiday budget by listing your planned expenses – gifts, and for whom; travel; decorations – and assign a dollar limit to each.” Sticking to that budget can help limit impulse purchases and keep you on track financially. In other words, take St. Nick’s advice: Make a list and check it twice!
Emily Irwin, senior director of advice for Wells Fargo shares that “Some people use an envelope system with cash, and they spend it down.” Tracking your spending through an envelope system, an app, or a spreadsheet can help hold you accountable and eliminate surprise credit card bills come January.
Others recommend using technology – the right way. Couponing apps or browser extensions, like Ibotta or Rakuten can help shoppers get money back on the gifts you were planning to purchase anyway! Other forms of technology, however, like those that allow you to buy now and pay later, can lead to greater debt down the line. One USA Today writer puts it well, saying “A good rule of thumb is that if it seems too expensive now, it will probably still be expensive later.”
Finally, consider what you gift. Gift cards, for example, make it very easy to set a budget – and stick to it. Experiences and homemade gifts can also help you give meaningfully without breaking the bank.
From my family to yours, have a very Merry Christmas and a Happy New Year!
Mississippi Treasurer David McRae is the 55th Treasurer for the State of Mississippi. In this role, he helps manage the state’s cash flow, oversees College Savings Mississippi, and has returned more than $80 million in unclaimed money to Mississippians. For more information, visit Treasury.MS.gov.
