Best Ways to Reduce Financial Stress and Anxiety During Holidays

Managing Financial Stress During the Holidays: What You Need to Know

The holiday season is a time of joy, togetherness, and celebration. We all love to buy gifts and host gatherings and prefer to travel, which adds up the expenses and sometimes leaves us over budget. This brings financial stress during the holidays, which were meant to be enjoyed with loved ones.

According to PWC 2023 holiday Outlook, American consumers can spend an average of $1530 on gift travel and entertainment, which is 7% higher than the previous year.

Individuals with an average income of $120,000 or more are expected to spend $3000 on average. Many Americans feel the financial strain during the holiday season.

With a proactive approach and focusing on what truly matters to you, you can make this holiday season joyful and financially stable

What causes financial stress during the Holiday season?

There are various reasons behind the financial stress during the holiday season. In order to manage financial stress effectively, it is crucial to recognize the reasons for this stress. 

The common reasons for financial strain during holiday seasons are

  • Social expectations: Friends and family may expect you to host gatherings and entertain during the holidays. Meeting these expectations lavishly and stylishly can lead to overspending and financial strain.

  • Trying to Outdo Others: The desire to do better than others can result in unnecessary spending. 

  • Focusing on material things: Excessive emphasis on material things and expecting these material things to be a source of happiness can put you in the situation of overspending. A desire for material things to compete with others can harm your budget and lead to financial pressure.

  • Not planning: Lack of planning can significantly harm the budget. Feeling to plan a budget for gifts, entertainment, travel, and other holiday expenses can amplify the financial stress.

Tips to manage your financial stress during the Holiday season

Create a budget:

  • Creating a budget during the holiday season can help you keep away from financial stress as it reduces surprises. A well-drafted budget allows you to manage and prioritize what truly matters to you. Mindfully allocate the budget for gifts and consider additional expenses like food travel, gatherings, and charitable donations that are part of the season. 

  • A well-planned budget gives you a sense of control. Money would be no object when you want to fulfill the wishes of your loved ones, but ensure everyone mutually agrees on a spending cap and ensure everyone is on the same page, including you.

  • Pay attention to the small details like holiday cards and postage.

Consider setting aside a little extra for unplanned purchases that tempt you and disturb your budget.

Alternate ways of gift giving:

Find alternative ways of gift-giving to reduce your financial stress and anxiety.

I suggest skipping traditional gift exchanges and instead focusing on celebrating and spending quality time with your loved ones. This can help reduce the financial burden. This might be challenging for you to propose the idea, but your loved ones may understand and even share your concerns. As inflation and rising interest rates affect many, they may also seek ways to manage their holiday budgets more effectively.

  • You can even choose alternative ways to gift that are certainly less expensive.

  • Opt for crafting a homemade gift like a cocktail mason jar or handcrafted bracelet, which can be cost-effective.

  • Gift cards can help you stick to your budget and plan how much you can spend on each card.

Sometimes, gifting experiences rather than physical items can be a creative way of gifting something. Sharing your time and creating memories with loved ones is more valuable than material gifts.

Split the list of dishes:

The holiday season is synonymous with gathering. Family dinners, meetings with friends, or sharing food at work brings everyone together. Getting something delicious is a way to cheer yourself up.

  • Food is a magical way of bringing people together; we often overspend by purchasing everything. Setting limits and committing yourself to what you can afford to prepare and cook is vital to avoid financial stress.

  • The easiest way is to split the dishes list to ensure everyone contributes. This way, you can continue celebrating the season with food and your loved one while managing the budget effectively.

Explore cashback and discounts:

There are many ways beyond credit card rewards that can help you keep more cash in your pocket.

  • Various apps and browser extensions offer cashback on your purchases. These discounts and cashback can provide extra savings by allowing you to earn more money on your holiday spending.

  • A cashback website can also help you compare prices and find the best deals on popular items.

  • Research shows that prices during major one-day events like black Friday are not significantly better than regular holiday sales. Therefore, avoid shopping on the black Friday sale.

Utilise coupons from newspapers or hunt for online promo codes.

Set your boundaries and say "NO."

The holiday season means giving from the heart, but it is equally important not to neglect your financial well-being. You may feel pressured to overspend on gifts or parties, and this is where you need to set boundaries and say no.

  • Be open and honest with your loved ones before the holiday arrives. Let them know that you will be establishing a budget and will spend within your limit. Stick to your set boundaries and contribute to your financial health.

  • Determine your financial limits for the holiday season in advance. Maintaining your holiday budget is more valuable than fulfilling the expectations of your loved ones and others.

Your financial well-being and peace of mind should be a top priority.

Control over your spending:

Deciding how much money you want to allocate for this holiday season is important. The right amount varies from person to person. 

  • It is advisable to avoid using your emergency savings for holiday expenses.

  • Break your budget into categories and prioritize what matters most to you. If your favorite part of the holiday season is hosting a dinner, allocate more funds to decorations, food, and activities than overspending on gifts.

  • Holidays are a way to relax and reward yourself after a busy year. Don't turn this enjoyment into a stressful period.

Last in, first out:

Before you prepare yourself to buy new decorative items and gifts for your loved ones, consider decluttering the other old items.

  • Many online platforms like Facebook provide an ideal marketplace for selling used items. This may include toys, books, old gaming systems, and home decor. If your children don't use old toys, you can help them find new homes, as various buyers are eager to buy them through different online platforms.

  •  Decorative items and furniture that don't fit your style can be attractive to various online buyers.

  • These ways of cluttering and decluttering your space can help you maximize your earnings and boost your holiday spending, making your holiday season less stressful and enjoyable.

Making payments with a credit card:

Credit cards are a convenient way to make purchases during the holiday season. They allow you to buy what you want now and pay for it later. This process can lead to overspending, especially if you exceed your budget.
You may end up paying a significant amount in interest. Consider using a cash or debit card while shopping for a holiday.

Final words

The holiday season is a time of joy and celebration but often brings financial strain due to overspending and social expectations. It is important to recognize the causes of this financial stress that makes the holiday more stressful rather than a game of joy. It is important to allocate a comprehensive budget for holiday spending and search for other options that can help to save more money. Remember, the holiday season is a gateway to happiness and relaxation and not to stress.

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Olivia Johnson 13 Nov, 2023

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