The holiday season is magical: twinkling lights, festive gatherings, and the sweetness of cookies baking in the oven. But while you are busy with the festivities, it’s easy to let your finances fall off the rails. The season’s demands can stretch even the most well-planned budgets – from gift-giving to travel expenses. Sadly, these financial blunders don’t end with the season; they can fester into years of financial misery that last like glitter all wrapped up in presents.
The surprising thing is how many of these mistakes are common. But the good news? With a little planning and awareness, most of these pitfalls can be avoided. It’s time to uncover some of the most common holiday money mistakes you might be making right now and see how you can sidestep them like a pro.
Impulse Buying During Sales
Your wallet is the victim of the siren song of holiday sales. It starts with signs that scream “50% off” or “Buy One, Get One Free” and makes it seem like you’re saving money, but you’re spending more. This psychology is what retailers bank on, which is why they time flash sales and limited-time offers to force you to buy something. Instead of filling your cart with the thought of a discount, pause and consider: Would you buy that thing if it were full price?
Skipping a Holiday Budget
Making a budget isn’t the most festive thing, but it’s one of the smartest. You’ll hear a lot said as Christmas approaches that many people go into the holiday season with a vague idea of their spending limits, only to find they’ve blown past them halfway through December. Saving yourself from financial headaches can be as simple as a spreadsheet or a pen-and-paper list.
Neglecting Hidden Holiday Costs
Expenses of the holidays aren’t just limited to gifts. All those shipping fees, gift wrap, holiday cards and extra grocery bills for hosting can quietly add up. These hidden costs tend to fall under the radar until they hit your bank account. The way to combat this is to include them in your initial budget as opposed to them sneaking up on you.
Overcommitting to Holiday Travel
Traveling during the holidays can be a painful, everyday logistical and financial headache. Airline prices are notoriously high, and gas prices are highest during peak travel seasons. To that, you add hotel stays, food on the road, and unexpected delays, and you have stress. If you need to travel to see family or friends, look to visit during off-peak times to save money.
Going Overboard With Decorations
Those Instagram-worthy setups are tempting, but they can cost a pretty penny. Consumer spending on the winter holidays is expected to reach a record $902 per person on average across gifts, food, decorations, and other seasonal items, according to the National Retail Federation’s consumer survey conducted by Prosper Insights & Analytics. DIY and reusing or decorating decorations can keep costs low, but not sacrifice holiday cheer.
Not Tracking Small Purchases
The real money wasters are the little things: the $5 stocking stuffers or extra rolls of wrapping paper. In isolation, they seem harmless until you spend a few weeks tracking them and discover a significant chunk of change is slipping away. Keeping track of every expense, no matter how small, can keep you on track.
Focusing Only on Material Gifts
Celebrating the holidays is more than just what’s under the tree. Many of us, however, end up falling into the trap of believing that we need to spend money on extremely expensive gifts if we’re going to express our love or appreciation. Sometimes, a family hike, movie night, or home-cooked meal can be more memorable than physical presents, and they’re easier on your wallet.
Overlooking Charitable Giving
The season is a great part of giving to those in need, but it is easy to overextend yourself. In the past, many people forgot to include their donations in their holiday budget, which strained them financially. Decide in advance how much you’re going to give and stick to it.
Skipping Price Comparisons
Retailers want you too busy to shop around. During the rush of the season, you may overlook better deals elsewhere. If you’re not using apps and browser extensions like Honey or CamelCamelCamel to do the legwork for you, you might be paying more than you should.
Ignoring Post-Holiday Costs
It’s a real holiday hangover, both emotionally and financially. Expenses don’t just end when the wrapping paper does. From higher-than-expected utility bills to returns and exchanges, expenses can creep well into January. In your budget, preparing for these can help get you off on the right foot for the new year.
Forgetting to Prioritize Yourself
It’s easy to forget your financial health between gift-giving and party planning. Taking on too many financial obligations without breathing space will make you feel stressed and regretful. It’s okay to say ‘no’ to things that don’t fit your budget. Self-care is not self-centered; it’s actually smart.
Relying Too Heavily on Credit Cards
Credit cards are not always a good thing. Rewards programs are nice, and they’re convenient, but if you’re not killing the balance every month, they’ll end up costing you more than you earn in rewards. Bankrate study indicates that the average credit card interest rate was 20.68 percent in 2023. This is essentially gifting yourself a pile of future debt if you’re funding your festivities this way.
Falling for “Buy Now, Pay Later” Plans
Afterpay and Klarna make it easy to spend, especially when payments are spread out over time. Even if it seems like you’re staying within your budget, these plans can encourage overspending. LendingTree found 42% of shoppers using buy-now-pay-later services have missed at least one payment, incurring penalties and ruining their credit.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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