How to Avoid Holiday Financial Stress

The holidays are a time for celebrations with family and friends, but it’s also a time when Americans are predicted to spend around $1,000 on gifts and expenses. For many people, the financial impact can cause stress and anxiety. But with proper budgeting and planning, that holiday stress can be managed or completely avoided.

How Does Financial Stress Affect Your Health?

Financial stress isn’t just felt with your wallet, it can possibly affect your health as well. Here are some side effects from financial stress:

• Mental health: Financial stress can cause or worsen conditions like anxiety, depression, and anger.
• Physical health: The stress can also cause or worsen physical health conditions like heart disease, high blood pressure, diabetes, and gastrointestinal problems. Lesser symptoms can be headaches, migraines, fatigue, stomach problems, and muscle tension.
• Sleep: Stress can lead to difficulty sleeping, which can lead to fatigue and other issues.
• Relationships: Being stressed can cause relationships to become strained, especially concerning arguments around money.

It’s easy to see why financial stress should be avoided, but knowing how to avoid it might not be. One of the best ways to avoid financial stress is to budget everything out well in advance.

How to Create a Budget for Holiday Spending

When planning out holiday spending, it’s very important to start as early as possible. The more months you have between now and the holidays, the easier it can be to reach your budget goal.

When figuring out how much money to save for, look at what you spent during previous years. That will give you a solid baseline on what to expect. From there, you can adjust depending on if you want to try and spend less or more. Once you decide on a budget goal, make sure it’s realistic and stick to it.

Many financial outlets say to keep your holiday spending between 1% and 2% of your annual income. According to estimates, consumers in the United States are expected to spend at least $1,000 on holiday gifts in 2024.

Unexpected Holiday Expenses

Even with all the planning, there’s still the possibility of unexpected holiday expenses coming up. These can include last-minute gifts or unexpected travel costs. Of your holiday budget, try and set aside a small emergency fund specifically for those holiday surprises.

Avoid Holiday Debt Traps

Nothing takes the joy out of the holidays like racking up debt. Plan on taking on only financial burdens that you can afford to pay back. If possible, pay with cash or with debit cards to avoid overspending. If you use a credit card, monitor your spending very closely. To help with gift-purchasing, many credit cards have rewards points that can be used on shopping sites like Amazon. When payment for your credit card debt is due, try to pay off the full amount or at least the minimum to avoid interest charges.

Saving for the Holidays

Community First Credit Union offers different ways you can save money for the holidays. From rewards credit cards, savings accounts, and CDs, there are multiple ways to build up a holiday fund over the course of a year. If you want to start planning for next year’s holidays, speak to one of our team members to put together a plan today.