According to a recent Gallup poll, Americans plan to spend an average of $830 on gifts this season.
As the largest gift-giving holiday, the final months of the year account for nearly 20 percent of total annual retail sales for retailers—making it the costliest season of the year for shoppers. This is not surprising.
What is surprising is how much more money we spend during this season than any other. For context, shoppers spent $600 billion during the Christmas season last year. The next highest seasonal total was the “Back to School” shopping season at $72 billion. In other words, on average, Americans spend 9X the amount of money retail shopping during the Christmas season than any other season of the year.
Unfortunately, however, when the calendar turns to January, the negative effects of this spending begin to set in: higher than expected credit card statements, tighter finances than imagined, increased stress, and regret over the amount of money spent.
How can we avoid this January stress and regret? What steps can we take to avoid overspending during the holiday season?
Here are 7 ideas:
1. Set a Budget.
Before the holiday shopping season even begins, decide how much money you want to spend. Think through all the different aspects of holiday shopping: gifts, travel, food, decorations. Divide your budget into the different categories: how much do you desire to spend on gifts? how much will travel cost? how many special events are on your calendar and how much will they cost? If the numbers aren’t lining up, what changes and/or sacrifices do you need to make?
2. Be Aware of Retail Tricks.
If merely creating a budget was the only thing needed to keep us within our spending limits, we’d be all set—not just for the holidays, but for life. Unfortunately, this is rarely the case. Even with budgets firmly established, many of us overspend. One reason this happens is because retail stores are shockingly good at getting us to part with our money.
Loyalty cards, retail credit, decoy pricing, loss leader (think Black Friday), incentives to return to the store, constant sales—all of these represent tricks that retail outlets employ to get us to part with our money. Be on the look-out for them—especially during the holiday season.
3. Limit self-gifting.
One of the most significant holiday trends over recent years is the increase in “self-gifting”—people treating themselves to presents when they are out shopping for others. Nearly 60% of people are now self-gifting according to the National Retail Federation. We will spend, on average, $130 per person buying gifts for ourselves. To avoid overspending this holiday season, limit yourself in this regard.
PS: Be careful when purchasing gift cards, 72% of shoppers also do some shopping for themselves when going to a store or website to purchase a gift card.
4. Cut down on convenience costs.
Some of the most hidden costs of the holiday season are “convenience” expenses. The holiday season throws us out of our usual family rhythms by adding extra responsibilities and activities. As a result, the price we are willing to pay for convenience begins to rise—sometimes, it is just easier to order fast food when running late for an appointment or getting a pizza for the kids if we need to attend the office holiday party.
In addition, all of the time spent shopping often leads to other unnecessary purchases: expensive coffee drinks, pretzels, smoothies, just to name a few. These expenses appear minor. But over the course of a month, because of the “Latte Factor,” they add up quickly.
5. Establish expectations early.
If you decide to cut down on the number of Christmas gifts you will be giving this holiday season, it is important to establish those expectations early. For example, for our kids at Christmas, they receive three gifts from us: one thing they want, one thing they need, and one experience to share with the family. But it wasn’t always this way. When they were younger, before we decided to pursue minimalism, we used to buy them a lot more gifts at Christmas. Therefore, when we decided to make the changes to our gift-giving habits, we took some time to inform them about it.
Similarly, if you intend to take a new gift-giving approach to your extended family, it is helpful to inform them early about your decision and why you decided to make it.
6. Look for shortcuts to make travel cheaper.
For some families, one of the largest expenses of the holiday season is travel—this is certainly true for our family of four as we travel back to the Midwest each Christmas. Being together as a family to celebrate the season is important to us, and it is important to many others as well. And while there are always going to be expenses incurred while traveling, we can still look for ways to limit them: shop around airlines and travel dates, avoid baggage fees by packing light, pack meals for on-the-go, and do your research on hotel costs, just to name a few.
7. Track spending.
One key component to wise financial stewardship is to track your spending on a daily basis. This is true for life, but it is absolutely essential to avoid overspending during the holiday season. If you have set your budget thoughtfully (Tip #1), it is important to pursue due diligence in staying inside it.
Because of the extra shopping during the season, the importance of tracking your spending during the month of December cannot be overstated. And you do not need fancy software or materials to accomplish this step. It can be completed with a simple piece of paper and pen—at the end of each day, just record the items you spent money on that day. And compare it regularly with the budget you created.
Avoiding overspending during the holiday season may not be easy. It certainly requires extra time and effort. But trust me, your January-You will thank you for it.
Charleen Kepner says
I appreciated the thoughtfulness of your thoughts. I’m looking forward to a much simpler holiday myself. It’s hard to do with a family, but we are working together to make our family holiday simple and special.
me too. I plan on saving and cutting holiday spending in 2021
I love this post ~ and I have been guilty of the self-gifting in years past! Usually I’m very savvy and don’t allow myself to spend, so in the past I’ve used Christmas as an excuse to “make up for lost time” lol.
At church a pastor said something that really spoke to me: “Christmas is not our birthday.” It’s JESUS’ birthday. Therefore shouldn’t it be about giving to those who truly need it rather than ourselves… or even buying our relatives things they may or may not actually need. When buying for someone else I typically do an “experience” gift now instead of material… memories are forever!
Joshua, do you have any already created documents that you can share to assist in keeping track of one’s budget? I don’t have any accounting software, but would benefit from a document that would easily help me keep track of my spending.
thank you so much, Marcia
Stephanie L says
Thank you for reminding me about how happy I am to not have any credit cards! We Dave Ramsey’ed our way out of debt eight years ago and haven’t had any credit cards since then; the offers keep coming, but they go right into the shredder.
Wishing everyone a joyous holiday season.
This will be our third (or is it fourth) year of doing a much smaller Christmas for our kids and us. We didn’t start it due to minimalism, but because we wanted to teach our children to be thankful for what they have and not to be entitled. This has been such a blessing for our family in many ways. Before, we would have a budget, but always run out of money. It was very stressful to me.
On another note, we have always let our kids have simple birthday parties with some friends. I always hated how many gifts they ended up with that they didn’t need. This year, we pitched the idea to invite friends to their parties, but ask that they not bring gifts, instead they could bring $5-$10 for charity if they desired. My now 8 year old (she had her birthday today!) just had her birthday and raised $40, which she choose to give to Samaritan’s Purse. What a blessing to see that she thought this was a good idea and she feels so good that she could give to others in need.
Stephanie L says
Are you familiar with Kids Can Give, Too? http://www.kidscangivetoo.com/
Experience gifts all the way! We took the kids to a play (The Lion, the Witch and the Wardrobe) and will probably do one more family, holiday activity. And the things they get to unwrap will be from grandparents. Except for maybe an activity coupon to use with mom or dad. And they love it!
And really, our favorite Christmas thing is the nightly Advent reading by candlelight.
All my life i’ve received 1 gift . And the rest is yummy cookies and food and family time.
Michelle @ Modern Acupuncture says
Thanks so much for this post. My family and I are cutting down on gifts this year – in fact, we’ve all agreed that none of us needs anything. Honestly, we just want to have a lazy day together with good food, reading, and maybe watching a holiday movie. But no gifts. It’s nice to see this concept supported somewhere – most of my coworkers and friends think this idea is crazy, or not in the holiday spirit. But without the stress of spending, I get to just spend time with my family. What could be more holiday-oriented than that?
We pull names for the adults (with the rule that nobody gets their spouse’s name) and again for the cousins (nobody gets a sibling).
Everyone gets something they like, nobody has to buy for the whole extended clan. There is much consulting with people for ideas! And we have a $25 limit for those gifts, so nobody’s going into debt – that part started when a lot of us were still students, and has continued. One year the limit was set at $10, because everyone was broke. It was really fun to think of something special on a low budget!
Christy King (@SimpleWhiteRab) says
Last year we started doing a grab-bag exchange with the adult kids instead of having everyone buy gifts for everyone else. Much less stressful, as well as much less expensive.
Establishing Expectations is the step my wife & I are working on. It has been a transition year for us as we have started a family & changed careers, so we are establishing our own Christmas traditions where we still only spend about the same amount of money and relatively doing “more with less.”
We’ve been traveling the US by RV for 5 years as a family so have learned to reduce spending at Christmas by necessity. There is just no room for all that stuff.
We’ve learned to focus on experiences, consumables, and replacements for worn-out everyday items. We’ve donated to charities in each other’s names. And we’ve volunteered in different ways (although we try to do that not at the holidays since places are often overwhelmed with offers during that time).
We stepped back from Christmas and couldn’t be happier. No pressure, no stress, no malls and angry consumers.
Instead we volunteer.
I will admit, I almost fell into the “self gifting” trap this month, but then I remembered I didn’t have a lot of money to spend this month, so I didn’t fall for it! The budgeting thing is not hard for me because I budget every month. Budgeting makes things easier for me because that way, I know where all of my money is going. I used to track my spending earlier in the year, but since my laptop is too old and basically dead, I haven’t been doing it lately. I would track my spending on my iPad using Pages, but since I have not had a lot of money lately, I don’t even bother doing it. I just try to survive throughout the month now until everything goes back to normal for me money wise which will be by next year hopefully.
Since I only have so much money, I can’t buy too many expensive gifts for my mother this year. This year, I just bought her something she really wanted and that has been it so far. Maybe I will buy her a natural soap at TJ Maxx for her stocking and for me, but that will be it. I really wish I had more money so I could afford a few more gifts for her, but she knows my situation and understands which I am thankful for. But this year, I know Christmas will be awesome! ^^
I can’t agree with this article at all. I understand that going overboard for holidays, or any event, is not good.
But the problem is that this has flown WAY past the point of any reasonable balance and collided into Tightwad Grinch lane.
I don’t think it’s tightwad grinch lane that Joshua is trying to get us to change into. What I got from it is to plan ahead so you aren’t overspending, be intentional about what gifts you are buying for your friends and family, and to realize that Christmas is one day in the whole year, so why go overboard and then regret it in the new year.
All it takes is one trip to the mall to realize that this article holds a lot of weight. Just look at all the frenzied people rushing around with their arms FULL of bags! It’s an article to get us to stop, think and slow down (on the spending too).
Where are you living where people have armloads full of bags at holiday time? Where i live there’s a total of(in a one hour driving distance or less) 2 targets, 4 or 5 walmarts, a TRU, multiple Family dollar/dollar general/dollar trees, i think the GS count stands at 4, a play n trade, at least 2 or 3 crafting stores, and a bunch of other stores and I’ve never seen people with armloads of bags when it comes to just holiday shopping.
Oh, and as far as the mall, there may be a bunch of people there where i live with more then one bag but that’s b/c people at the mall tend to do the bulk of their clothes shopping there since that’s what almost every store at that mall centers around. Clothes, shoes, accessories, purses, or make up.
“and to realize that Christmas is one day in the whole year, so why go overboard and then regret it in the new year.”
B/c Xmas is the one day in a whole year that we should be able to indulge a little guilt free.
“I don’t think it’s tightwad grinch lane that Joshua is trying to get us to change into”
Really? So you’re trying to say that a guy that is trying to make us go minimalist in the one time of the year where we should be able to indulge guilt free isn’t trying a tightwad Grinch? Especially when he’s already trying to brainwash us into the concept of a “minimalist” lifestyle is a good thing?
Sorry but NO. I understand getting rid of clutter and excess stuff in ones life to a certain extent but minimalist goes way beyond that
It’s true here Sherrie in the Chicago area. I had a customer last week come through my line and she had two huge carts stuffed to the gills…of basically… useless junk. Her total was $4000.00! As I was checking her out, I was picturing all this junk in a landfill…and wondering just how soon it’ll get there. And Sherrie, where I work, it’s all year long. People run up HUGE department store bills and come in every month to pay the minimum. The interest rate is so high. When they max-out they turn to Visa-Discover—etc. I see it firsthand on a daily basis. So to answer that one question of where—Chicago.
I tend not to follow blogs that I don’t agree with. Maybe you need to reconsider your motives for reading this blog. As for the rest of us, I get the feeling that we are here to lift each other up with support in our choices to follow the minimalist lifestyle. Merry Christmas!
Jeffrey Pillow says
“B/c Xmas is the one day in a whole year that we should be able to indulge a little guilt free.”
Is it really guilt free? Or is it delayed guilt as Joshua made note of? Delayed as in, when the next credit card statement arrives.
Sherrie, no one is brainwashing anyone on this blog, nor is the idea to “make” anyone a minimalist.
We all read the articles here for enjoyment, for new ideas and perspectives, and for motivation with our own versions of minimalism.
Decided to spend way less this year…I don’t know if I actually did, but bought more things over time WITH cash. Only person left to shop for is my darling.
I only gave things that people can use, one daughter needed bath towels, my son got coffee grinder cuz he burnt his old one out. Gave them both coffee beans from local shop.y youngest is only one who got something from mall, but she’s thirteen and I refuse to drive myself crazy…heehee. Grandson got quality toys from small toy shop that just opened in small town close by.
Gave my folks local wine, cheeses and spices from local food co-op. My mom was notorious for giving back what we’ve given her over years. But learned to give edibles.
So far I’m really happy.
My partner and I celebrate Yule, I made a wreath and he made me a yule log.
We decided to do a “stocking challenge” for each other last year just for fun, £20 was the maximum, but this year we have changed it, the price stays the same but everything (unless edible) has to be pre-owned, so we buy only from charity shops. At least then, we are contributing to charities and not to the big companies.
It’s not about spending, it’s about giving. I made a hat and scarf for a homeless man we see at our local shops and have gifted a new neighbour who is a single parent, with a box of christmas decorations.
We don’t buy fast food as we live a minimalist lifestyle anyway. Our food bill will not change all that much, I’m baking cookies and cakes and making homemade goodies to give to friends.
I love this article though, it’s so very true. Over here in the UK, things aren’t all that different. People seem to go crazy in the shops buying a months worth of food for two days.
Lori in Prescott says
We try to remember it is just one day – not 30 days or 60 days. The further ahead one buys for the holiday, the more things they purchase. We had one friend who did all his shopping on Christmas Eve night! I would rather give birthday gifts than Christmas gifts. Each year I step back and see that it’s the holiday music, the Christmas cards, and the fun food. Our little city does up the season in a big way – many free holiday events to attend if desired. It never has to be about going into debt. Just say no.
My husband and I stopped buying gifts for everyone a few years ago. We just head over to the tisbest website and buy charity gift cards instead. Each recipient gets to pick their own charity to give to. It’s a win win.
I truly enjoyed reading your article. It’s so inspiring and I realized living simple with no clutter here and there brought joy in my life. Thank you for the encouragrment. You inspired me!
Jeffrey Pillow says
Last year my wife and I started doing the something you want, something you need, something to wear, something to read idea with our two children.
I think I learned about it through this website.
I noticed the Wellness Mama link you had up the other week also included this idea.
No matter, it has reduced our stress greatly because it puts a categorization on purchases with an emphasis on items that are needed, not wanted (except for one).
I second gifting experiences too. The best gift I have ever received was two tickets to the Mephistopheles play at the American Shakespeare Center in a neighboring city.
Just me, my wife, and a wonderful play.
And a babysitter for my kiddos :)
It is a shame really that the actual reason for Christmas has been supplanted by consumerism.
If only the wise men had not brought a gift each…
We don’t actually know for sure that the wise men brought a gift each.
We know there was more than one wise man (it’s plural in the original).
We know they came bringing “Gifts of gold, frankincense, and myrrh.”
But we don’t know how many of them there were. There could have been 10 of them, splitting the cost of the gifts.
Jeffrey Pillow says
Don’t be that person
Not trying to be.
Actually, I meant it as encouragement towards a simpler Christmas. My kids often “go together” on gifts for each other, and get one nice thing instead of a few cheap things that won’t last. Which totally fits with the minimalist ethos.
Jeffrey Pillow says
10-4. I thought you were nitpicking one word out of my comment. No worries. And, I’m with you on the gift-combining. We do that in my house too with my two little ones. It cuts down on junk gifts and they receive a gift they share which allows them to play together with one another and create fun memories that way.
It might not have even happened……..
We are doing the same thing with my wife’s family except we are doing something to eat instead of something to wear. We call it Victorian Christmas.
I love this article! :) We are doing the same thing for gifts this year, only we have added one more: Something you want, something you need, something to wear, something to read. It has really helped! My husband and I talk about what we are going to buy for our kids for each item (and we don’t overspend). Also, because it narrows down ideas for each gift, it has saved us time running around looking for something to buy, and just buying random stuff to put under the tree. All around, the kids will be happy to open four gifts each, and we will be happy we stuck with a budget and didn’t have to spend much time shopping!
We’re trying this 4-gifts approach this year too, ie. ‘something you want, need’ etc. It has helped me a lot in planning what to buy and my 8 year old son says he is happy with the idea too.
Hayley Richardson // The French Experiment says
@JH I love that idea! It’s new to me and I don’t have kids but it’s definitely one I’ll tuck away in my back pocket for when I do. Thanks for sharing!
I have envelopes for all my variable sending. Each month I put a set amount aside in my Christmas envelope. This way I know exactly what I have to spend each year and I find my thinking conforms to the budget.
John P. Weiss says
The self gifting tip. Yep, guilty. I shun shopping malls and like to give some of my artwork as gifts. But then I go to the art store and…that’s where the self gifting dilemma starts! Thanks for the advice!
My husband and I decided on a budget for Christmas a few years ago, then we set aside a little bit each month so that we have the total amount saved by Christmas. This year, we have decided to do more homemade gifts (apple butter, strawberry jam, etc.) so we probably won’t even end up using half of what we have set aside. It’ll be nice to add that to our investment accounts come January!
Bravo! I think the key word is “save”. For something as predictable as Christmas (Same Date, Every 12 months) planning your budget and managing our own and ‘others’ expectations should be a breeze. Less debt, less stress and maybe our christmas could be more about what matters most, people!
Jan Ramsey Brick says
I love your three Christmas gifts idea. And it ties in perfectly with the three wise men’s gifts. A teaching moment tied in with practicality! :)
I used to think I had to have lots of boxes to be unwrapped or my kids wouldn’t get that magical Christmas morning moment. How silly of me. Our family being together is all the magic we need for Christmas morning.
Thanks as always for your wisdom.
Kalie @ Pretend to Be Poor says
These are great, practical ideas. I love the 3 gifts you give your children. We want to give our children a fun Christmas morning without adding a lot more useless stuff to our home, and without detracting from what Christmas means to us spiritually.
I use an Excel spreadsheet for our Christmas budget each year. In fact I just edit the previous years’ sheet, which saves time and helps me establish a baseline budget that I can tweak depending on the years’ needs.
In hindsight, it was actually one of those ‘retail tricks’ gaining popularity about 15 years ago, the odious gift card, that turned me towards the path of minimalism. Seeing everyone exchange identical lumps of plastic coated currency was just so sad. So my spouse and I decided to end all gift purchases. Instead we pick a theme every year (candles, soap, lip balm, marinara, soup) and handmake gifts for our families and close friends.
Omg I thought it said marijuana, then re-read marinara… Still chuckling…
I love the pick-a- theme-of-the-year idea. I kind of end up doing that, but never thought of it like that. I think if I make a plan to stick to a theme, that will eliminate most of the stress of coming up with ideas. Thank you for this!
My work has been insane, Joshua. At the end of the day…I am so glad it’s someone else parting with their money and not me. People are using their credit cards like it’s free. You are so right—I will also be the one taking their payments in January! :)