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The point here is that American culture has always celebrated consumerism. We even created a special holiday to celebrate it (I’m looking at you, black friday and cyber monday). Many of us will do anything to justify a ‘deal’, especially at this time of year when Christmas shopping becomes our number one concern.
Giving gifts is a good idea, but using a credit card at checkout can lead to serious financial problems. Last year, 27% of shoppers borrowed money for holiday shopping, and about 30% of them are still struggling to pay off their purchases a year later. And, according to a 2024 report by Morning Consult Pro, “One-fifth (20%) of U.S. adults say they have to go into debt to pay for holiday celebrations or obligations.”2 This doesn’t have to be you. .
I’m going to step on my toes a little bit. Even if the cost of living increases due to inflation and household budgets become tighter, this is no excuse for taking on debt. It’s up to you to get creative and find ways to make more money or cut back on your Christmas budget.
Why do people go into debt during the holidays?
Being aware of common pitfalls is the first step to breaking out of the pattern of relying on debt for your year-end purchases. Let’s talk about three reasons why people go into debt during the holidays and some strategies to avoid financing your festivities this way.
1. American Christmas fun
Let’s be honest: our expectations (and our kids’ expectations) for Christmas are spiraling out of control. In this age of social media, it’s easy to feel pressured to go into debt to get that Instagrammable Christmas that popular high school girls posted last year. My father, Dave Ramsey, always says this. “We buy things we don’t need with money because we don’t need to impress people we don’t like.” And this is one of the biggest reasons why many people go into debt.
I would like to allow myself to make Christmas different for my family, especially if I am trying to save money.
Comparison is a trap. At the same time, I understand that, especially as a mother. There may be an invisible pressure to create the most magical Christmas for your family, especially if you want to do for your children what your parents didn’t do for you. If some of you feel that way, I understand. I’m honestly proud that you want to create a better life for your children than they already had, but going into debt to do so isn’t the answer. Debt robs you of your peace of mind and the opportunity to build a legacy for your children.
2. Consumer behavior
The problem starts with believing that going into debt or using credit cards for holiday gifts is no big deal. Did you know that credit cards didn’t exist until 1950? For decades since then, people have relied on credit to make their Christmas purchases, and now it’s time to break that pattern . The easiest way to break this habit we have as a society is to chop up your cards and decide to only spend the money you have in your bank account.
Not all meaningful gifts need to have a high value. (St. Petersburg)
Other behaviors that can get you into trouble include impulse buying and shopping without a plan. Stores will tempt you to pick up an extra candle or a beautifully wrapped box of chocolates near the checkout line, but don’t give in.
3. Lack of financial space
If you’re on a tight budget, it can be tempting to go into debt, especially during the holidays. If you were living paycheck to paycheck, you would never think about saving money for holiday shopping. So what do you do? Even if it’s not in your budget, you might be tempted to go into debt to get that adorable toy kitchen set your child has always wanted.
Even if you haven’t swiped a credit card, you may have thought about financing with a buy now, pay later program. christmas shopping. Listen to this: According to a PYMNTS Intelligence report, “Consumers are using BNPL and other postpaid options during the period. [2023] During the Black Friday shopping frenzy, people spent 48% more than they would have if they had used other payment methods. ”
(Tell your friends and family that you don’t want to go into debt for presents. Perhaps this just means you’ll prioritize buying presents for people in your household.)
Practical ways to avoid debt
Okay, I mean, why How can you actually avoid debt during the holiday season? Here are my top four tips to set you (and your family) up for success so you can enjoy this time of year and avoid debt at the same time. Introducing.
1. Make a Christmas budget
So, start planning how much you want to set aside for Christmas spending this year. Personally, I use the EveryDollar app to create a budget because it’s a really easy way to organize my money. We recommend that you make Christmas its own category within your budget. Then, within that category, make a list of everyone you want to spend money on and enter the amount for each name. It may seem a bit detailed, but it will help you stick to your budget when considering adding additional items to your cart.
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2. Manage expectations
I would like to allow myself to make Christmas different for my family, especially if I am trying to save money. Tell your friends and family that you don’t intend to go into debt for gifts. Perhaps this just means prioritizing buying gifts for people in your home. Or maybe you’re just giving presents to the kids this year. (Sorry, I don’t think you should feel pressured to buy gifts for adults.)
3. Be creative
Not all meaningful gifts need to have a high value. Who doesn’t love receiving homemade cookies?Also, consider giving your kids an experience that will help them create memories as a family. After all, your child values your time and attention more than a nice pair of shoes.
Christmas tree near fireplace in decorated living room (image) (St. Petersburg)
4. Start a sinking fund for next Christmas
Christmas 2024 may be a little late to do this, but come January 2025, start saving a little bit each month for Christmas expenses. Also, keep in mind that many Black Friday sales start in mid-November. Planning ahead for Christmas 2025 will help you grab these deals early.
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When you’re in the middle of holiday shopping, don’t dig yourself into a financial hole for gifts that people might not remember.
Even if you don’t buy expensive gifts for everyone on your list, you’re still a good parent, friend, and neighbor. Trust me, 2025 will be much better if you can enter the new year with the peace of mind that you don’t owe anyone anything.
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