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The holiday season is filled with many joyous things, but the cost of these festive events and gifts can leave you feeling a lot of regret after the season ends. According to the National Retail Federation, every American spends an average of $900 during the holiday season.1 Most individuals put those expenses on a credit card. And unfortunately, the average balance per customer on credit cards is at an all-time high.2
As inflation rises and seniors stretch their dollars to get the necessities of day-to-day life, credit card debt goes up. During the holidays, that extra $900 or so that the average person spends adds to the balance. But with credit card interest rates at historic highs – with the average rate sitting at a whopping 28.93% this holiday season, according to Bankrate – paying debt off becomes more and more difficult.3 That might be especially true for the elderly, many of whom are on a fixed income and can’t afford a major deviation from their usual budget. When the bills come due in January, many seniors might realize they’ve gotten in over their heads.
Avoiding credit card debt in the first place is the goal. If you must carry balances, it’s essential to approach the situation wisely. And that might take some rethinking of gifting and events during the holiday season. Here are some tips to help ensure you can enjoy the holidays but not feel financial regret when they’re over.
Budget Carefully
Budgeting month-to-month is something you should be doing for good financial health, but that takes on additional importance as the additional expenses of the holiday season approach.
Carefully consider how many people are on your list and how much you can afford for each one. Don’t be afraid to put a cap on how much you can spend – after all, everyone knows exactly what inflation looks like these days and even the cost of groceries has become untenable, especially for those on a fixed income.
Avoiding overly expensive gifts or lavish meals out will help you stick to your budget. You should also avoid impulse purchases, especially during those days between Thanksgiving and Christmas, when sales and discounts threaten to lure you into spending more than you know you should.
Keep in mind that your day-to-day budget shouldn’t change. You should never skip a utility bill, for instance, or miss a mortgage payment so that you can afford holiday gifts. You shouldn’t cut out the things that matter for your safety and security either, such as assistance from housekeeping services or an affordable and life-saving medical alert bracelet or wristband.
Look for Thoughtful and Affordable Gifts
Gift-giving is a significant part of the holidays, but you don’t have to pay top dollar for a gift that someone will truly love and remember. Some of the most cherished gifts are handmade, which can cost very little to create other than time and imagination.
For instance, a hand-painted ornament could turn into a family heirloom, a hand-sewn runner could become the dining table centerpiece, and jarred hot cocoa or cookie mixes can lead to a bonding experience in the kitchen. You can spend wisely but still give your friends and family unique gifts that are both thoughtful and personal.
Some gifts, such as subscriptions or memberships, have the option of paying yearly or monthly and make a big impact. For example, the gift of safety and security never goes out of style. An affordable personal alarm button is a great example of this. The classic medical alert can cost as little as $19.95 per month with no equipment or shipping fees. It’s an ongoing gift that can lead to amazing peace of mind and literally save a life.
Try Non-Physical Gifts
You could also consider giving experiences rather than physical gifts. It’s a sure bet that you aren’t the only one trying to manage finances and debt during the holiday season. Wouldn’t it be nice for everyone to get a break from that and focus on what really matters—spending quality time together and making memories that last a lifetime?
Hosting a holiday potluck, cookie swap, or funny ornament exchange where everyone participates provides the gift of togetherness and joy. The sharing of something so simple and loving becomes a memorable event that may even become a new tradition.
Play Games that Limit Gift-Giving Costs
Some holiday-themed games put a natural limit on gift-giving costs. For instance, a family might choose to play Santa Roulette and pull names out of a hat. You buy a gift only for that person, and there is a limit on the price of the gift that everyone agrees to.
Or you could make an even better game of it by stating that this year, no money can be spent on gifts. They must be created out of what you already have at home. It’s a money-saver and an incredible challenge!
Be Careful of “No Interest” Periods
It might be very tempting to get a credit card that offers you a no-interest rate for 12 months or more. This might lull you into spending more money than you should, with the reasoning that you will pay it off within that promotional period and not have to pay a dime in interest.
This works great in theory and can be a really nice option if you are making a large, necessary purchase. But if you’re using it to make purchases of gifts, the costs can add up quickly. And if you somehow end up in financial straits between the signup and the day the promotional period ends, you might wind up getting hit with interest on that debt you racked up during the season. Given all the potential pitfalls, it’s a good idea to avoid signing up for any new credit cards to pay for the holidays.
Pay in Cash
A credit card tends to separate us from our money in a psychological sense. According to Psychology Today, when you hand over cash for a purchase, you feel the impact of your money actually leaving your hands.4 You are also limited in what you can spend if you’re spending only the cash you have in your wallet. It can make you think very carefully about each purchase.
You don’t get that same impact when you swipe a card, collect your purchases, and walk away. Of course you must pay that money back, but using a credit card makes it easier to not think about what you’re spending or deciding that you can spend a little more because “you’ve got time” to spread out the payments for it.
Prepare for Next Year
Start planning your holiday expenses early in the year. By setting aside a bit of money in savings every month that is earmarked for gifts, travel, and food, you can ensure that you have enough money at the end of the year to pay for the things you want to give and not feel the crunch of high credit card debt later.
You could even open up a dedicated savings account that is only for holiday purchases – that gives you the opportunity to stick to whatever balance you have in there and not use credit cards at all.
Another good option is to purchase classic, untrendy gifts throughout the year for the people on your list. Make a point of hitting up the sale and clearance aisles in your favorite stores to look for meaningful gifts that will make someone smile. Tuck those gifts away in a safe place until the holiday season rolls around. Just remember that styles, sizes, and tastes change, so buy with caution. This tip works best with appliances and jewelry.
Talk to Family and Friends
One good way to avoid going overboard is to set expectations from the very start. There are certainly some who will welcome being on an established budget for holiday spending.
Wanting to give generously can make it difficult to keep spending under control. After all, advertisers want us to believe that gifts serve as a symbol of how much you love someone. But please do not buy into that false hype designed to make you spend more. If you make it clear that you want to give more meaningful, affordable gifts, you might find that sharing experiences and time together are what everyone really wants anyway.
Budgeting is wise and necessary, and it helps us afford the things that bring us safety, warmth, security, and peace of mind. An affordable medical alert system with fall detection for seniors and elderly adults is one of those things that can bring you comfort and help save money in many ways, and the peace of mind you and your family receive in return is priceless.
