The typical American will spend $1007 on holiday shopping this year, a figure that marks the ninth straight year of increased holiday spending by consumers.Savvy product marketers and retailers cash in on the “tradition” of holiday shopping, opening their doors on Thanksgiving, holding the famous day-after-Thanksgiving Black Friday, and pushing online deals on Cyber Monday. They debut hot consumer electronics around the holidays and offer special deals on shipping, financing, and gift-wrapping to keep buyers in a spending frenzy.
However, if you’re managing debt, trying to save for the future, or dealing with other expenses, should you bow to the pressure to spend money on presents? Financial gurus such as Dave Ramseysuggest spending no more than 1% of your gross income on holiday gifts. This means that if you earn $50,000, you’re wise to keep holiday shopping at $500 or below.
There are many ways to think about holiday spending—including spending your money on student loan repayment, charitable giving, gestures as gifts, or time in nature. Here are a few options to consider as the days get shorter and the holiday list grows longer.
Give Gifts, But in Moderation
Is it possible to sidestep rampant shopping? Yes! Rather than going out on Black Friday and trying to find something for everyone on your list, ask your friend group if you can “draw names” for a gift exchange, meaning each person chooses to give one gift to one person—and set a price limit. Another option: Consider “going in” on gifts with friends or family to a particular person. That way, each gift giver can contribute to the gift’s cost at a level that they can afford, and you can take advantage of a deal to stretch your budget.
Shop Where You Work
Retailers hire seasonally, and if you want to budget for Christmas without breaking the bank, you could do worse than picking up a retail side hustle. Sure, retail work doesn’t pay top dollar, and you may have to deal with mall parking, impatient shoppers, and the perils of sugared-up children waiting for Santa, but if you want to holiday shop without going into debt and also tap store discounts from your temporary employer, job prospects look good. The National Retail Federation projects that retailers will employ an additional 650,000 workers this holiday season. There is a danger, of course, that you may spend more than you earn—so shopper, know thyself before choosing this solution.
Skip the Shopping, Give Experiences
Rethink what a “gift” is – why not give a gesture or experience rather than an object? Are you an ace personal chef, a pro at weekend car detailing, handy with gardening or hedge pruning, a whiz at feng shui or closet organizing? Offer a redeemable coupon(s) for your services.
Outdoor retail cooperative REI initiated “Opt Outside” — giving its employees the day off on Black Friday and encouraging them and the store’s clients to go outside instead of to the mall. Connecting with family and connecting with nature, the store asserts, is a healthier way to form holiday memories than battling the fray at local retailers. If you’re into the idea of a winter outdoors experience, rally some friends or loved ones, and possibly some four-legged companions, and consider some of REI’s suggestions for maximizing their outdoor version of Black Friday.
Give to a Cause
Who needs Black Friday or Cyber Monday? On Giving Tuesday — the Tuesday after Thanksgiving — many nonprofits turn up the heat on their annual asks. What began as a $10 million experiment in 2012, a promotion to remind consumers that giving to help causes is a worthy (if not worthier) way to end the year than shopping, is projected to bring $318 million to nonprofits this year.
Many nonprofits line up matching donors for campaigns or offer special feel-good promotions at Giving Tuesday, which means you often get extra bang for your buck this time of year. You can donate to charity in a loved one’s name, or just declare your choice to give to charity as an example to your community. Side benefit: Charitable contributions are tax-deductible, so your good deed may help you come tax time.
Wrapping Things Up
Roughly 25% of consumers told researchers at OpenX, a Pasadena, California-based advertising company, that they planned to increase their holiday spending this year. Given the strong economy and low unemployment trends, the optimism isn’t surprising–who doesn’t love to share their wealth when times are good?
Still, preparing for a rainy day and reducing debt may be an equally valid way to celebrate a flush year and avoid overspending on Black Friday or Cyber Monday. The US personal savings rate has fallen to about 6% of income from a peak of over 17% of income forty years ago, and spending on the future by repaying debt or investing might be the kindest holiday gift anyone can give themselves this holiday.