How to avoid going into debt during the holidays?
<div class="user-question">Hi Frich! I'm freaking out and need some help. I feel like this happens every year and I don't know how to avoid it, but I go into debt every holiday season. With gifts, travel, huge sales and parties, I have no idea how to navigate the period of Thanksgiving, Black Friday, Christmas and New Years, without starting the new year in debt. Please help...</div>
While generally, people seem to find deep enjoyment in the holidays, I’ve noticed many people find the pressure of the holidays to be anxiety-inducing, so I am right there with you!
The first time I moved into an apartment alone in Seattle, it was the end of October and I suddenly needed to figure out if I was going to buy a tree (who knew how expensive those are, by the way) and how I was going to spend for the next several months while still staying under budget. Suffice it to say, I failed that first year, but I’ve been on a roll ever since.
The holidays are probably my most high-stress season both at work (hello, never-ending holiday cocktail parties) while going through my “holiday savings vault” to buy gifts for everyone in my circle. Social pressure to buy the perfect gifts, host elaborate parties, and splurge on festive decorations can lead to overspending, guilt, and financial strain.
Every year, I have to make the conscious choice surrounding how I’m going to plan my holiday spending, and it’s safe to say by New Years I’m ready for a fresh start (and a break from all the holiday energy).
I’ve found by implementing strategic behaviors and leveraging some of my favorite fintech tools to stay on track, the social pressure and anxiety can be at least somewhat allayed. Here are my pro tips on making it through the holiday season.
🎄Actionable Steps towards a More Joyous Season
1️⃣ Set Clear Financial Goals and Stick to a Budget: The foundation of resisting social pressure lies in setting clear financial boundaries. Before the holiday season begins, take time to outline your priorities and allocate a specific budget for gifts, events, and decorations. This practice ensures your spending aligns with your values and prevents impulsive purchases driven by comparison or guilt.
<div class="frich-tip">🎄Frich tip: Use a digital budgeting tool to allocate funds for each category. Once the money is spent, avoid exceeding the limit and remind yourself why you’re sticking with your budget. I save *all year long* for the holidays by putting a fixed amount into a vault for the holidays. Make sure to put this money aside in a HYSA.</div>
2️⃣ Communicate Your Intentions Clearly: Open communication with family and friends can help set realistic expectations and relieve pressure. For example, suggest gift exchanges, homemade presents such as handmade photo albums if you’d like a more personal (and often economical) touch, or experience-based gifts rather than traditional shopping sprees. This approach fosters a culture of mindful gifting that values thoughtfulness over monetary value.
<div class="frich-tip">🎄Frich tip: Propose a Secret Santa system or set price limits for gifts in group settings to ensure everyone feels included without overspending. </div>
3️⃣ Practice Mindful Consumption: Practicing mindfulness during the holiday season helps resist the lure of advertisements and social comparisons. Reflect on the motivations behind each purchase. Ask yourself whether the item truly aligns with your values or if it's driven by external expectations. Recognizing these triggers empowers you to make intentional decisions. Additionally, a minimalist approach of going to volunteer together or holding a potluck can help reduce overall costs while being incredibly fulfilling.
<div class="frich-tip">🎄Frich tip: Implement a 48-hour rule for non-essential purchases. If you still feel strongly about buying the item after two days, it’s likely a thoughtful choice rather than an impulsive one.</div>
4️⃣ Build a Holiday Worksheet: Take some time to put together a spreadsheet of estimated costs for all the things you’re planning to spend money on, broken down by category: drinks with friends, dinners, gifts for family, gifts for friends, airfare, hotels, etc.
<div class="frich-tip">🎄Frich tip: In the first column, include all the general categories you think you’ll spend money on, and in the second column, list what you think you can afford to spend. Then add them up, ((cringe)), and try to lower your estimates. Open up the spreadsheet before going to each event. I like to keep my spreadsheet in a note on my phone so I can pull it up immediately before I do something, see what my “total” available to spend is, and then when I leave or the event ends, I subtract whatever I spent. That way I always know what’s left.</div>
🎄Letting the (Fin)tech Help out!
I have a motto when I’m feeling financial pressure: when in doubt, let fintech help you out! Here are a few of my favorite fintech platforms that help take the stress away.
🎄PocketSmith: the PocketSmith app shows you everything about your current and future finances all in one place so you can make better financial decisions to make sure your holidays are not tainted by financial stress.
🎄Acorns: Acorns is a micro-investing platform that rounds up your purchases to the nearest dollar and invests the spare change. During the holidays, Acorns can serve as a reminder to prioritize saving even amid spending. By automating small contributions to your future, it fosters a long-term financial mindset.
🎄Resisting Holiday Social Pressures
The holiday season should be a time of joy, gratitude, and connection, not financial stress or social pressure. I really believe in celebrating in non-material ways in order to bring about true fulfillment.
One of my favorite holiday practices is to write notes of gratitude (by telling the people I love why I am so happy they are in my life) in their holiday cards.
Additionally, December is my favorite time of year to fully unplug and delete social media. If you are the type of person who is deeply affected by social media pressures, I cannot emphasize this one enough. Here’s another GGRT (Generally Good Rule of Thumb): Unplug. From. Your. Phone.
That being said, don’t forget to thank yourself for being committed to your mental health at the end of the season, and feel free to ping me online to share your successes and failures!
Btw - here's how others are doing👀
Is it ok to come empty handed to a holiday party?
😇33% Never!
👀33% If we're close, I'm ok coming empty handed
🎁34% I only bring something if the host specifically asks
Happy holidays!
Saira Rahman
VP, New Investor Initiatives - Fundrise
