It’s the most wonderful time of the year….except for anyone strapped for cash. The holiday season is already upon us, with advertisements and store displays popping up immediately after Halloween. While many of us want to go all out for our loved ones this Christmas, the reality is that it may be simply unaffordable for many of us.
Christmas has evolved over the years from a simple celebration to a blow-out, complete with long wish lists, fancy parties and far too many occasions that call for gift-giving and other expenses. It is no wonder that many Americans feel anxiety about being able to pay for Christmas: the expectations are high, and our budgets are already strained.
If you are one of the many Americans who is stressed about the prospect of paying for gifts, parties, cards and more, it may be a sign that you cannot afford a lavish holiday celebration. This doesn’t mean that you have to forego Christmas entirely; instead, it means that you should consider scaling back or doing something different so that the focus is on spending time with family and friends rather than on expensive gifts and parties. You will then be in a much better position after the holidays have ended — and won’t spend your holidays with knots in your stomach as you dread the bills coming in January.
So how do you know if Christmas is too expensive for you? Read on for five key signs that it may be time to cut back.
Credit is Your Only Hope
In the U.S., credit is king — but that isn’t always a good thing. Credit cards can be a useful tool if you use them wisely, but if you aren’t careful, high interest rates and compounding interest can land you in some serious hot water. Nowhere is this more true than with holiday spending.
Buying gifts on credit is a sign for many people that they cannot afford the holidays. If you cannot shell out $300 for a video game system with cash, then it is likely that the gift is just too expensive for you. Credit cards make it too easy to buy something that you cannot afford — which people often justify because it is for a gift, not for themselves.
But debt doesn’t distinguish between selfish and generous purchases, and buying something that you can’t afford can cost you a lot more over the long run. If you cannot afford to pay for gifts without using a credit card, then you probably should not be buying these gifts. Focus instead on smaller gifts that you can afford, or make something homemade for your loved ones. If you are buying a gift for someone, chances are that they know and love you — and wouldn’t want you to go into debt on their behalf. Even kids can understand that they can’t get everything that they want; talk to them openly so that they understand that they must be realistic when it comes to their wish lists.
You Are in Serious Debt
If you used credit cards to finance last year’s Christmas, chances are good that you are still paying off your gifts — putting you on unstable financial footing going into this year’s holiday. But whatever the reason for your debt, if your bills have mounted, you should avoid going further into debt for gifts and parties.
Debt can have a major impact on all aspects of your life, from your physical and emotional health to your ability to meet financial goals. That is why it is so important to evaluate your debt carefully before embarking on holiday shopping. Does your debt exceed your income? If so, then you may need to revisit your Christmas gift list. Consider doing things that don’t cost a lot of money, like going ice skating or taking a wintery walk with loved ones.
You Don’t Have a Budget Set
Undoubtedly, Christmas is a time when many of us exceed our monthly spending. This is common: it isn’t typical for most people to have to buy a lot of gifts for others in a short period of time. That is why it is so important to have a budget set for your holiday spending — and to stick to it.
Without a budget, it is easy for even little things to add up. You could spend $100 on stocking stuffers for one person without realizing it, or blow several months’ housing expenses on buying everything on your kids’ lists. Take the time before the holidays to make a budget, and then stick to it. Ideally, you should set aside money throughout the year to help you pay for your Christmas shopping without busting your monthly budget.
You Are Struggling to Pay Other Bills
It may seem obvious, but it must be said: if you are having trouble making your car payment or student loans or any other bills, do not go on a holiday spending spree. A moment of magic on Christmas morning will quickly be outweighed by having your car repossessed, your water shut off or your loan go into default.
It can be especially difficult to not spend a lot on Christmas if you’re a parent and want to fulfill your child’s wishes. However, doing so trades short-term happiness for long-term pain — and is more damaging in the long run. If you are having trouble meeting your other financial obligations, do not go all out for Christmas. Stick to gifts that are free or cheap (thrift shops are a great place to find good quality used toys!), and put the money you would have spent towards getting into a better financial situation.
You Are Saving for Big Financial Goals
Even if you are not in debt and are not worried about paying your bills, you should think twice about having a lavish Christmas if you are saving up for something big. Whether it’s a new house, a car or home improvements, these items are far more important than some gifts — and you shouldn’t compromise your goals for a fun holiday.
This is also true when it comes to saving for retirement, college or other goals. Yes, it is nice to have a ton of gifts under the tree — but those gifts should not come at the cost of a secure retirement or a well-funded college account. Carefully consider what you spend before you shell out — and find other ways to have a meaningful Christmas this year!