Copyright dailymail
Christmas may seem like a lifetime away, but getting your finances in order now can help prevent the financial hangover that comes with the new year. Andrea Woroch, a consumer finance and savings expert, revealed to Daily Mail the five easy things you can start doing in October to guarantee a savings fund for the holiday season. Christmas has become increasingly expensive, with the National Retail Federation estimating that consumer spending reached over $900 a person last year. Of the $900, consumers typically spend around $641 on gifts and the remaining cash on decorations, food, and other seasonal items. That figure has increased every year since 2016, with only a brief dip in 2022. Last year, holiday shoppers spent four percent more than they did in 2023, to a record $994.1 billion, according to the NRF. The financial strain of the season can increase stress and anxiety, with a poll conducted by the American Psychological Association in 2023 reporting that 89 percent of respondents experience heightened stress levels. Financial concerns were cited as the number one cause of increased stress, with 58 percent reporting that they worried about spending too much or not having enough money. Although the Christmas stress may never truly subside, Woroch advised that getting ahead of finances now will make the season easier before it even approaches. She cited five easy tips that consumers can integrate into their lifestyles starting today, from budget cuts to boosting savings and getting a head start. 1. Setting your holiday budget It's easy for things to get out of hand when shopping for the holiday season, from splurging on a gift to overspending before your shopping is complete. Woroch recommended setting a budget early on to avoid diving into Christmas shopping blind. She warned against focusing your budget solely on gift shopping, as smaller expenses, such as extra babysitting services, holiday attire, and seasonal outings, can add up quickly. 'Figure out which smaller expenses you don't want to give up and build your budget around that, potentially cutting back on gifts or travel so you don't overspend or go into debt,' Woroch told Daily Mail. 2. Transfer your credit card debt Paying off credit card debt can better position consumers financially; however, Woroch noted it's not a realistic goal for most people. She recommended transferring credit card debt to a balance transfer card, which offers 0 percent interest for up to 21 months. Balance transfer cards help consumers pay off debt because they aren't charged interest, so all the money they put into erasing their debt goes directly to them. Balance transfers are ideal for those who would otherwise need several months or more to pay off their debt. 'This will buy you time to make smaller monthly payments through the holidays so you can afford gifts and other seasonal expenses without worrying about interest accruing on your account,' Woroch explained. 'Once the holidays are past, you can work on a more aggressive debt repayment approach'. The consumer finance expert added that credit card comparison sites, such as CardRates.com, can help shoppers narrow down the right balance transfer card. 3. Rack up rewards for purchases Woroch recommended using the Fetch app to earn points that can later be used for a free gift. She added that the pre-holiday season is a good time to consider opening a new credit line. Certain credit cards offer an introductory bonus, which provides extra rewards when you spend a specified amount within a certain period after opening the new line. For example, Discover offers an unlimited cash back match for all new cardholders. Bank of America provides a $200 online cash reward bonus after $1,000 in purchases during the first 19 days of opening an account. Although opening a new credit card may allow consumers to rack up points, it's important to double-check that you meet the spending requirements and avoid spending cash that you can't pay off. 4. Stash away a small amount of cash each week Perhaps the simplest way to save money in time for the holidays is to set aside a small amount of cash each week or pay period for holiday spending. Woroch noted that where you save is important too, recommending a high-yield savings account to earn extra interest. High-yield savings accounts earn up to 10 times the rate of traditional savings accounts, which allows more money to accumulate. Woroch recommended Bread Savings because it offers a 4.25 annual percentage yield. Lastly, she added that consumers can easily uncover savings by slashing their monthly bills. Negotiating rates, seeking competitor discounts, switching providers, bundling services, increasing insurance deductibles, canceling or pausing subscriptions/memberships, switching to generic medications or toiletries, unplugging unused gadgets, and switching to a lower-tiered data plan are factors to consider when reviewing monthly expenses to uncover extra cash. 5. Start shopping early Getting a head start on holiday shopping can not only prevent the headaches that come with a last-minute haul, but also is a smart way of budgeting. The dent from holiday shopping won't be as significant and can help manage cash flow. Purchasing gifts and decorations for Christmas now also allows consumers to take advantage of fall sales, such as Prime Day, Woroch noted. She added that prices are likely to be cheaper earlier in the year, especially as tariffs are set to take effect. Woroch recommended the Karma app to compare prices and set up sale alerts for gifts on your list. The Santa's Bag app also tracks gift lists to help shoppers stay on budget throughout the holiday season.
