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Prices are Climbing—Here’s What to Do Now to Prepare for the Holidays

Brittany VanDerBill  |  August 4, 2022

Inflation is prompting price increases on nearly everything. Here’s how to get a jump on paying for your holiday celebrations now.

Inflation is something we’re hearing about a lot lately. You’ve probably noticed the price of everything going up, from groceries to gas. And those price increases are likely to impact the price of your holiday celebrations—from travel plans to turkey dinners. We’ve compiled some helpful hints to help you save now for your Christmas, Hanukkah, and holiday celebrations in this inflationary year.

SET EXPECTATIONS

First things first: determine what you want your holiday celebrations to look like. Thinking about how you want to celebrate and what gift giving will look like ahead of the holidays can set you up for a happier holiday season. 

With inflation causing prices to creep up, you may not be able to go all out on holiday celebrations. If that’s the case, Sara Rathner, personal finance expert at NerdWallet, advises, “Start those tough conversations now, so you can get your loved ones on board with less expensive ways to celebrate.” 

Elizabeth Pennington, CFP® Professional with Fearless Finance, adds, “Overall, it’s unlikely that you’ll be able to get the same amount of gifts for the same price this year.” To that end, she recommends taking a look at “what’s most important for you when giving gifts.”

She suggests being intentional with where you spend your money during the holiday season: “Assuming that you can’t have everything, what parts of the holidays do you want to prioritize? Which pieces matter the most to you?” 

ESTIMATE WHAT YOU MIGHT SPEND

We don’t know for sure what will happen with prices and whether they’ll continue to climb. However, Pennington says, “Without making predictions, I think it’s a good idea to plan on prices continuing to rise.”

In light of this, she recommends that you put together an estimate of what you might spend on the holidays this year. She advises taking a look at what you spent on the 2021 holidays first. “If you’re comfortable with last year’s spending level, tack on an extra 10% to that number. Your goal is to save this amount over the coming months (less anything you’ve already saved for the holidays).” 

If that amount seems too high, Pennington notes you’ll want to “revisit your numbers and figure out where you can cut, focusing on which parts of the holidays are the most important to you and your family.” 

Ultimately, Pennington points out, “The last thing we want is to accumulate consumer debt for gifts/holiday festivities. No gift is worth that.”

START SAVING NOW

Rathner recommends you start saving for the holidays now: “Don’t wait until November to see what money you have in your budget for the holidays. Now’s the time to set money aside every month so you have the cash available to buy gifts without getting into debt.” 

Pennington agrees and typically advises her clients to “save for holiday spending (and other larger annual expenses) on a monthly basis throughout the year.” 

STASHING YOUR HOLIDAY SAVINGS

If you don’t think you’ll be tempted to spend the money you’re putting away, Pennington says you could just add it to your existing account. You could then track your holiday savings in an app or spreadsheet that you’re already using.

However, some people might see that extra money in their account and be tempted to spend it. In that case, Pennington feels “it’s definitely worth setting up a separate savings account.” She adds that you’ll want to choose an account without any fees, though. 

Pennington suggests, “The key thing, especially if you’re saving in a separate account, is that you set up automatic transfers (or even better, direct deposits from your paycheck) so that you don’t see the money before you’re ready to use it.”

HIT UP THE SALES

“Between now and the holiday season, there are lots of opportunities to shop during seasonal sales. Plus, you can avoid the stressful scramble to find those perfect gifts at the last minute,” notes Rathner. 

Pennington has similar thoughts, and she actually prefers to buy gifts throughout the year. She recommends setting a per-person budget and watching for sales or using online price alert tools. She also suggests exploring the idea of homemade gifts if budgets are tight. 

GET A JUMP ON TRAVEL PLANS

For those who need or want to travel this holiday season, it’s a good idea not to wait too long to make your plans. Rathner explains, “Ticket prices go up – and flight availability goes down – the closer you get to the holiday season. Start pricing out your travel itinerary a few months in advance.”

If you’re planning to travel for the holidays but have some flexibility, that could work in your favor. For instance, Pennington points out, “If your family is okay with celebrating Christmas on the 26th (and agrees to give Santa the memo), flying ON the holiday itself is often dramatically cheaper.” She also says you could use credit card points to purchase tickets or extend “your trip by a day or two so you aren’t flying at peak times.”

Her other tips include booking tickets today—provided they’re refundable tickets in case you need to cancel later. And you could set up price alerts for flights so you can book when and if the price drops to a level you’re comfortable with. 

PLANNING AHEAD FOR THE HOLIDAYS

We can’t predict the future, but we can take a few steps today that will take the pressure off our wallets when the holidays come around. The time to start saving is now, and you may also want to book flights if you know you’ll need to travel. You’ve still got a few months to keep an eye out on sales to snag some holiday gifts at a nice discount, too. 

The bottom line is to be intentional and realistic about your holiday celebrations, especially in an inflationary year. As Pennington observes, “Feeling like you have to automatically spend more because of inflation is where the real danger lies.”

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