Debt or Disappointment? Financial Tips for Parents During the Holidays + Inflation
37% of Americans are willing to take on credit card debt for the holidays this year. Here’s how to have holidays on a budget without disappointing your kids.
December 9, 2022
It’s the most wonderful time of the year until the credit card bill comes due. The pressure to celebrate and enjoy the holidays can lead to unexpected debt that follows you long after the season ends. The average American spends an extra $997 throughout the holiday season on everything from gifts to events and decor.
Historically high inflation rates only add to the stress of budgeting for the holidays. This year, inflation reached its highest rate, 8.5%, since 1982. That means everything from gifts to groceries is more expensive than last year.
Of course, inflation won’t cancel the holidays, but it will lead to credit card debt. Tally’s latest survey found that 37% of Americans are willing to take on credit card debt for the holidays this year. The most common reason why they are willing to do so? 43% of Americans don’t want to disappoint their children/family members.
People are determined to celebrate the holidays, no matter the cost. Tally’s survey showed that 33% of Americans with children are too embarrassed to cancel or change holiday plans because they couldn’t afford it.
But price-conscious families don’t have to sacrifice enjoyment for budgeting during the holidays. Here’s how to celebrate the season without taking on additional debt.
Choosing between debt and disappointment
First, parents aren’t alone in feeling this way. Tally’s survey found that 37% of Americans are willing to take on credit card debt for the holidays this year, avoiding budgeting for the holidays altogether. But parents, in particular, feel the pinch. 50% are willing to take on debt to avoid disappointing their children.
Of course, parents want to give their kids the best, but it’s important to have a strategy and budget in place when it comes to gifting. Last-minute spending can lead to higher expenses and deeper debt. Here’s how to avoid disappointment and debt.
Go in on group gifts
If your children want a gift outside your budget, consider asking relatives to contribute. Let grandparents, extended family, and friends who typically get your children gifts that a contribution towards this larger expense is on the top of your wish list this season.
Make it a teaching moment
For older kids, understanding budgeting for the holidays and gifting can be a valuable teaching moment. Instead of buying them what they’re asking for, consider gifting them a portion of the cost and working with them to figure out a way to come up with the rest of the cash, whether it be babysitting, saving allowance, or waiting until their birthday to save up for the purchase.
Search for deals
For the kids that just love opening presents, search for deals.
Additionally, gift them items they already need, such as socks or school supplies, that they will enjoy opening on the holiday.
Don’t let embarrassment drive you to debt
FOMO can feel doubly strong during the holiday season. The peer pressure to overspend is real. According to Tally’s survey, 33% of Americans with children are too embarrassed to cancel or change holiday plans because they can’t afford it.
Focus on your finances
It’s easier said than done but don’t base financial decisions on what others think. For all you know, they may have debt. You are the one who has to pay your credit card bill.
Unless they share it with you, it’s impossible to know the balance of friends and family members’ bank accounts. If the spending and celebrating seem too good to be true, it may very well be.
It’s never too late to rein in spending
Already feel like your budget’s gone out the window this season? It’s never too late to look at your spending and ease back into your budget.
If you have already started putting Christmas on a credit card, assess your interest rates and try not to add to it. Consider an app like Tally†, which gives you a lower-interest line of credit and pays your cards off efficiently. That frees up cash for the holidays, and you have a plan for your debt.
Move around money
If there are some traditions or gifts you just can’t say no to this year, take a hard look at your budget. Is there spending you can cut back on this month to make ends meet? Consider putting your streaming subscriptions on hold or canceling your gym membership until the new year.
You can also look for money sitting in plain sight. Consider selling things you rarely use to earn some cash and make room for new gifts.
But, if those cuts aren’t enough, try to only say yes to what you can afford this season. Don't overextend yourself for events or gifts you don’t feel passionate about. And remember, for things you can’t afford, that’s your business. You don’t have to tell anyone it’s about money.
Stretch your money further this season
For many of us, this is the first time in two years that we’re traveling or gathering together for holiday celebrations. You deserve to celebrate, but with some planning, it is possible to do it within budget.
Party with a potluck
One of the biggest lines in our budget where we’re experiencing inflation is the grocery bill. Ask guests to shoulder some of the costs if you're hosting a holiday event. Consider putting together a holiday potluck, where everyone brings an item for the party, instead of you taking on all the costs (and prep).
Shop in unexpected stores
It may take a little more time and think ahead, but you can save on gifts by shopping for them in unexpected ways.
Consider shopping second-hand for items on your list. That could mean utilizing local tools like Facebook Marketplace or your neighborhood thrift store.
You can also shop online using eBay or other resale sites. If someone wants an electronic for the holidays, consider shopping for a refurbished model through a third-party site. Also check at your local Best Buy for any opened returns, often discounted from the original list price.
It may take more time, but looking for second-hand or refurbished items can save you from taking on credit card debt during the holiday season.
Debt or disappointment, you don’t have to choose
While we feel the pressure to overspend during the holidays, the burden of credit card debt can come back to haunt you in the new year.
Instead of throwing out your budget to make everyone’s holiday wishes come true, consider planning ahead and looking for ways to save while keeping everyone happy. Holidays on a budget don’t have to mean disappointment.
Ultimately, you may not be able to do everything you hoped for this season, but you can start the new year without the burden of new debt.
Working on ways to pay down existing credit card debt in the meantime? Tally might be able to help. Tally helps qualifying Americans consolidate credit card balances into a lower-interest line of credit.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.