Hey Taylor – I was hoping, perhaps naively, that the inflated prices we’ve seen would come down before the holidays, but everything still seems really expensive. I don’t have a ton of extra cash to spend, so how can I keep Christmas special without falling into debt? – Madolyn

 

Hey Madolyn – It’s a cruel truth we all have to face—inflation is easy, deflation is hard. Once the prices rise, we’re stuck with them until demand falls, and demand is the one thing that never really goes down during the holiday season. The adjustment isn’t easy, but if you can reframe your approach, you should still be able to make this time of year special for you and your family.

 

  1. Know what you can spend. Knowing is half the battle, and if you know that you’ve got X amount of dollars to spend on gifts, that’s a good place to start. It might rule out big-ticket items for everyone in the family, but that’s something people will understand. Whatever happens, you have to let your budget be the leader. Wishlists can adapt much more easily than money can magically appear, so figure out what you have to spend on everyone and go from there. If you want to find ways to free up more money for Christmas shopping, think of an expense you could cut this year, like a few less meals out or fewer trips to the movie theatre.
  2. Shop early. Obviously, waiting for inflated prices to drop didn’t work. If anything, companies are waiting for last-minute shoppers to pay top dollar for whatever they need. If you start shopping in November, you can make your money go further and cut back on the stress of finding everything you need before December 25. You also stand a better chance of finding a deal or two when Christmas is still on the horizon. Come December 20, stores will be selling out of items and reduced prices will be a distant memory.
  3. Prioritize experiences. This is where you can really make up some financial ground. Walking the neighborhood to look at Christmas decorations, making a gingerbread house from scratch, decorating the Christmas tree—these are the activities we really cherish during this time of year and they cost far less than a trip to the mall. Again, if you start planning early enough, you can schedule a lot of free activities that feel like gifts without the massive price tag. You could even replace an expensive tradition with a more cost-effective one, like hosting a potluck instead of the family dinner at the local steakhouse.

 

High prices are a real drag on our quality of life. That said, if we get strategic with our spending and focus on the things that matter, the joys of Christmas are still there for the taking. Thanks for the question!

 

Taylor Kovar, CFP®

CHIEF EXECUTIVE OFFICER