Financial Pitfalls to Avoid During the Holiday Season
The holiday season brings joy, celebration and time with loved ones. However, it can also bring financial pressures that can hijack your financial goals.
Two-thirds of Americans say there’s an unhealthy cultural pressure to buy gifts they can’t afford. Between gift shopping, hosting, and travel, spending can quickly spiral out of control. Being aware of these three common financial pitfalls can help you enjoy the holiday season without starting the new year buried in debt and regret.
- Overspending without a budget: Just like any other area of life, it’s important to set a holiday budget to avoid overspending. It’s easy to justify spending a little extra for special occasions, but these small decisions can add up fast. Before you start your purchasing, set a total holiday budget and break it down by category – gifts, food, travel, entertaining and decorations.
- Falling for “Buy Now, Pay Later” traps: Buy now, pay later (BNPL) services have become increasingly popular, with 51% of Americans saying they have used an installment plan to make an online purchase. While convenient, these purchases can encourage overspending by making purchases feel smaller than they really are. Multiple BNPL plans across different retailers can be difficult to track, leading to missed payments and late fees.
- Jumping at every sale: The holiday season brings plenty of opportunities to buy gifts at discounted prices, especially around Black Friday and Cyber Monday. However, retailers are skilled at taking advantage of human psychology and pressuring buyers into purchasing gifts that weren’t originally planned for. If you see an item on sale, ask yourself if you would still purchase the item at full price.