Even without inflation on the rise, Christmas can get expensive. Of course, one of the largest Christmas expenses is gift giving. A Bankrate survey conducted earlier this year, when inflation was at its highest, found that one in four Americans expected to go into debt in order to make sure their loved ones felt the joy this Christmas season.
If you had your way, you would want to buy a yacht for your loved one. Sometimes a little splurging is necessary when you're looking for the perfect gift, but the reality is that not everyone can afford to give a gift, much less a pricey one.
The average American household's debt is expanding rapidly. In the first quarter of 2022, the Federal Reserve Bank of New York reported an increase of $27 billion to $15.85 trillion in household debt. Experian research for 2021 shows that fewer than one-quarter of American households are debt-free.
Many people feel like they have to buy expensive gifts for their friends and family at Christmas and other holidays, even if they can't afford them.
There are a few things to remember if you ever find yourself in this predicament. Following these pieces of advice from financial experts may help you navigate this situation.
Tell It As It Is
As the saying goes, “clarity is kindness.” Based on this, Nathan Mueller, a financial planner and financial coach at Black Bird Finance, argues that if you tell people that you're trying to get out of debt or save money, they won't have high expectations. You won't have to deal with the disappointment of not meeting those hopes. They'll understand your kind intentions and can decide whether to reciprocate to the extent they feel comfortable.
Knowing that it's not just a strange thing that happened to you can also help you deal with your expectations.
Becky Neubauer, a personal finance expert and founder of Twenty Free, notes that it's easy to think that everyone else's budget can handle expensive things. But in truth, most people aren't in a position to do so. If you understand this, it may give you some relief because it will be easier for your loved ones to understand your situation.
Postpone Gift Giving
Neubauer says, “Suggest a time when you can exchange gifts once you have gotten back on your feet financially. In my experience,” she continues, “it can be extremely helpful to suggest a spending limit for everyone to follow, so it takes the pressure off of trying to “keep up” with what everyone else is spending.” Neubauer emphasizes that communication is vital. This way, everyone understands what is happening and won't take your gift-giving decisions personally.
Prepare Ahead
You can get proactive to prepare for next year's gift-giving opportunities. You can start saving earlier. Depending on your situation, Neubauer recommends having savings specifically geared towards buying gifts for the holidays, events, or birthdays, which can be a real lifesaver. You can set aside money as it comes in without putting too much strain on your budget. Then, as the time approaches, you don't have to feel like you have to choose between keeping your lights on and buying your mom a gift on Mother's Day.
Remember Your Financial Goals
Drawing from his experience guiding people through their money challenges, Mueller finds it helpful to remind his clients how much they have budgeted each month to save for Christmas. “I bring this up because, when they compare yourself to others, they might feel unaccomplished, but when they look at the actual work they put into saving over the year, it's worth a lot to honor their achievement.”
You may recall banks once offered Christmas club accounts to help kids budget for gift buying. You can do the same with your home budget.
To help you stick to your original plan, Marianne Nolte, a certified financial planner at Imagine Financial Services, suggests writing down your gift-giving budget and making a list of all the people you plan to give gifts to and how much you want to spend on each one. If you think you may waiver, withdraw cash to pay for gifts. Put this cash into an envelope, and when the money's gone, so is your ability to make additional purchases.
Be Creative
Mueller advises stretching your gift budget by making something yourself, like baking treats or making art. Folks can save a fraction of what they could have spent and create something far more valuable than anything that can be purchased. For people who don't like to make things, Mueller suggests creating an experience for the people you plan to give something to, like taking all your extended family to the movie theater and buying popcorn. “A $15 ticket and $10 for food might cost you half as much as a physical gift,” she states.
Alternatively, she recommends that you rent a cabana at a local water park, a pontoon boat, or a private batting cage. Free activities are also an option depending on how thrifty you need to be—hiking or visiting a lake, along with food and drinks to make them feel special, will still cost you less than buying gifts for several individuals. In Marrianne's words, “sharing the gift of your time instead of a monetary gift or making a special edible treat are all fun ways to express your love and gratitude toward someone.”
Wrap Up
Hopefully, these tips help you get through this holiday season with a smile and a light heart, irrespective of your wallet's condition. And remember: It's not about spending more money—it's about spending less (if you can still afford to)! Debt is not something that needs to hold one back from giving gifts, especially when a debt repayment plan is in place to pay off that debt. And with several thoughtful but inexpensive ways to make your loved ones feel special, you may be more prepared than you think for this season.
This article was produced and syndicated by Wealth of Geeks.
source https://wealthofgeeks.com/gift-giving-when-in-debt/
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