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Have no fear, Christmas is here!

Christmas is a time for cheer, joy and a quality time spent with your family. Are we letting money ruin what is really important?

Christmas shopping more stressful this year due to inflation

According to the U.S. Bureau of Labor Statistics’ October report, consumer prices increased 7.7% year-over-year in October. Due to the impact of inflation on manufacturing expenses, such as gasoline and labor, it is anticipated that prices would rise for many of the goods and services Americans will purchase during the winter holidays.

As Americans adjust to high inflation, many want to spend roughly the same amount on fewer products.  Consumers anticipate to spend an average of $880 on retail goods and $575 on experiences, which is 5% less than previous year. As a result of increased prices and stressed finances, shoppers will purchase around nine presents this holiday season, compared to 16 last year.

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According to the Bureau, overall food costs have increased 10.9% year-over-year leading up to Thanksgiving and Christmas, while supermarket prices have increased 12.4%. These price rises will have an impact on purchasing behaviour of consumers.

45% of customers with an annual household income of less than $50,000 will modify their buying habits over the Christmas season, the largest percentage of any income level. In addition to spending less money, shoppers expect to buy early, purchase fewer things, and seek out more coupons, discounts, and specials.

According to a Bankrate report, the holiday season may cause Americans to accumulate debt, particularly younger Americans. Nearly one-third of Gen-Zers and millennials, or 32% combined, anticipate using a “buy now, pay later” plan. These groups are spreading out credit card payments across numerous billing cycles, compared to only 24% of Gen-Xers and boomers.

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However, funding these acquisitions is getting more expensive than ever. The average annual percentage rate (APR) on credit cards reached an all-time high of 19.04% on November 9th, according to data from Bankrate.

That is not the end of this “sad” Christmas story. According to a research by the American Psychological Association, in 2022, US people listed money concerns as their leading source of stress. Nearly  90% of individuals cited inflation as their primary source of worry.

Another poll conducted by the American Academy of Sleep Medicine in 2022 revealed that about 90% of Americans lost sleep at night due to economic or pandemic-related health concerns.

It is not all about the money

On top of all this, there are limitations which affect the shoppers unrelated to money. December 2022 will also bring a number of new strikes. For example in the UK, the RMT has scheduled more industrial action for December and January. This will be limiting the availability of holiday happiness for those who rely on UK railways or London buses for transportation.

More strikes also in ECB: ECB employees furious over low salary increase

In December, further picket lines are emerging, as postal workers and hospital personnel have also scheduled strike dates. Workers in the ambulance industry voted in favor of strike action on Wednesday and might join the picket lines before December 25th. These situations add to the general pile of stress, having to deal with services being unavailable to do the big shopping.

The psychology of Christmas

Many of us give gifts to strengthen social relationships with our friends and family. When we are unable to give gifts or do not receive gifts from close friends, we may experience a profound sense of humiliation or disappointment.

Some individuals view money as a solution for mental pain. When people don’t have the finances to create the ideal holiday experience, they feel upset rather than enjoy the opportunity to celebrate in less expensive ways. Some associate their net worth with their self-esteem and view their inability to fund vacation activities as a personal failure as opposed to a temporary financial setback.

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In other circumstances, individuals may feel so nervous about the possibility of a financial downturn that they dramatically reduce their expenditures and lose out on opportunities to interact with friends and family.

What you can do to make Christmas great again?

Purchasing gifts that are more costly than they were the previous year might generate significant concern. However, adjusting your purchasing habits around Christmas does not have to be dreary. Creating a budget, attending to your needs, and granting yourself peace of mind might be the greatest presents you offer to yourself over the holidays.

Here are 5 strategies for coping with holiday-related financial stress and worry:

1.Discuss low-cost celebration ideas with friends and family

Limit your expenditure by establishing spending caps. If you like, you can eliminate the present exchange all together and concentrate on celebrating with your loved ones. Your loved ones will hopefully understand and may even sympathize with you, especially considering the year we’ve all had and the financial difficulty it has caused for millions. The key here is not to burden yourself with thinking you are the only one in this situation.

2.Become used to saying no to more expenditures

Even while the holidays inspire generosity, you should not neglect your own needs. If you feel compelled to spend more than you can afford on presents or extravagant events, you should allow yourself to say no.

Have an open dialogue with your loved ones before the holidays. Explain that you will be establishing a budget and establishing limits on how much you will spend. No one understands your budget better than you do, and you are your own greatest advocate.

If you continue to feel overwhelmed or pressured, determine where you might cut down. Limit what is less essential to you so you can devote your efforts to what is.

3.Create a reasonable Christmas spending plan

If you don’t know how much you intend to spend during the holidays, unexpected costs might rapidly mount up. Creating a budget might help you choose how much and where you want to spend money.

Consider that a budget of $1,000 in 2021 may not go as far this year thanks to inflation. Determine your overall Christmas budget depending on your holiday savings or general disposable cash. Avoid dipping into your emergency reserves for the holidays. Avoid expanding your spending out of a sense of responsibility.

4.Create shopping lists and maintain organization

A shopping list may help you keep record of your food purchases, present purchases, and more. This goes hand in hand with your budget. To create your lists, write everything in a location where it can be seen at a glance.

For gift lists, you may break down your expenditures per person, what you want to buy for each individual, and where you intend to purchase the gifts. Use incentives, discounts, and/or cashback. Holidays are full of sales and deals which can save you a lot of money. This way you may be able to squeeze in items otherwise out of budget.

5.Find delight and engage in self-care

It is easy to forget to pamper yourself when feeling pressured, especially when the burden is financial and holiday-related. However, rewarding yourself does not have to involve purchasing an item. It might be as little as taking a stroll or giving yourself a break.

Remove yourself from the chaos and engage in an activity that provides you joy. Perhaps it is drawing, singing, dancing or a long, hot shower. Whatever it is, remember that you can and should reward yourself. In any case, the holidays are also a time for rest and recuperation.

Final thoughts

Whatever your plans or budgets are for the holidays, do not forget to enjoy them. Have a great time with your family and friends, preferably without work or any stress. Do not worry about things that do not matter and make sure that you are there for those, who are closest to you.

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

Comments

  • Rene Remsik December 11 2022 22:56

    Spending money on Christmas is overrated.
    Spending time with your loved ones is underrated.

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