Broker Check
Financial Watch | December 2021

Financial Watch | December 2021

December 21, 2021
Share |

4 Ways to Keep Spending in Check as Costs Rise This Holiday Season

According to the National Retail Federation, this year’s holiday spending is expected to shatter previous recordsdespite supply chain bottlenecks1 and the steepest 12-month increase in inflation in more than 30 years.2 That’s because many Americans—who have accumulated more than $4 trillion in savings since the start of the pandemic—are ready to spend this holiday season.3

While consumers have already spent an estimated $8.9 billion on Black Friday, that fell slightly short of the $9 trillion spent in 2020. However, shoppers spent far more between November 1 and 28, than in previous years, in an attempt to get ahead of potential inventory shortages and shipping delays.4

This year also promises to be one of the most expensive holiday shopping seasons. As a result, many people are finding that their budgets aren't stretching as far as they had expected. With less inventory to meet demand, retailers aren’t offering the same steep discounts many shoppers have become accustomed to in recent years. Even with discounts, it’s estimated that shoppers will pay 9% more this year for the same goods.5

While that can make it challenging to keep holiday spending in check, there are steps you can take to help manage spending, beginning with the four tips below.

1. Create a holiday budget

A budget is a great tool to track spending; however, people often forget to include certain holiday expense categories, beyond the purchasing of gifts. These include travel, hosting gatherings, seasonal decorations, special holiday meals, and tips for service providers like your dog groomer, hair stylist, or the kid who mows your lawn. To ensure your budget captures all of your holiday expenses, begin by listing each area of spending and set a dollar limit for each.

2. Take advantage of deal-finder tools

No matter how much you plan to spend this holiday season, shopping for the best deals is always a smart move. A number of online tools, websites, and apps are available to help you find discounts and bargains on a wide range of items. Free services, such as Groupon, offer discounts on travel, activities, goods, and services. Others, like Rakuten, offer cash back on the purchases you make at thousands of stores, including many that you may already patronize. Browser extensions like Honey and Popcart can save you time and money by searching the internet for price comparisons, alerting you to price drops, and automatically applying coupons and promotional codes at checkout. If you’re planning to travel to see family and friends over the holidays, or escape to a resort for some rest and relaxation, travel comparison sites can help you save on airfare, hotel packages, rental cars, and more.

3. Pay with cash

If you’re concerned about getting carried away by the season of giving, and overspending as a result, consider paying holiday expenses with cash instead of credit cards this year. Paying with cash—such as bank debit cards or prepaid gift cards—can help curb impulse spending. If you do use credit cards, do so judiciously and make sure you’re using your holiday spending budget to track each purchase. That way, there are no “surprises” when you receive your post-holiday credit card bill.

4. Protect your packages

As more people take advantage of the ease and convenience of ecommerce for their holiday shopping, package theft—often called “porch piracy”—is also on the rise. In most cases, there is no recourse for packages that are stolen upon delivery, other than filing a police report. Fortunately, there are a number of ways to protect your purchases if you know you won’t be home to receive them. All major shippers now offer the ability to opt in to receive tracking information via text and email notifications, including the United States Postal Service. If you know you won’t be home to receive a package, consider asking a neighbor or friend to retrieve it and hold it for you, or consider shipping to an alternate address, such as your workplace. In many cases, packages shipped by United Parcel Service (UPS) can be delivered to a UPS store near you. Similarly, shipments from Amazon can be delivered to one of their secure lockers where you can retrieve your packages on your schedule.

To learn more about establishing a budget or getting a jump on adopting sound financial habits for the new year, contact the office to schedule time to talk.

1 https://nrf.com/media-center/press-releases/nrf-predicts-highest-holiday-retail-sales-record
2 https://www.bls.gov/news.release/cpi.nr0.htm
3 https://www.cnbc.com/2021/08/03/most-of-americas-extra-pandemic-savings-are-going-to-the-wealthy-.html
4 https://www.nytimes.com/2021/11/29/business/black-friday-sales.html
5 https://www.cnbc.com/2021/11/26/holiday-shopping-2021-sticker-shock-could-change-retailers-approach-to-sales.html

This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.