5 Steps To Avoid Stress And Debt This Holiday Season

The holiday season often comes with added stress for cash strapped families trying to find the perfect gifts for everyone on their list. But supply chain issues, inflation fears, and the ever-lingering risk of COVID infection mean Americans may need to spend a little more time planning a happy and healthy vacation.

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GOBankingRates sought advice from financial experts, including One CEO Brian Hamilton, whose company conducted a survey of U.S. spending this holiday season, to help you have peace of mind and financial security. Survey results showed Americans needed to take stock of their financial well-being this year, as 48% of middle-class Americans surveyed said they faced financial stress in the process. holidays.

“Your mental health is closely linked to your financial health,” Hamilton observed. “What we discovered during the pandemic had a massive impact on mental health, with everyone locked inside. There were a lot of reasons people became more aware of their mental health. And we’ve found a strong correlation between mental health and financial health. “

Taking steps to control your finances this holiday season can improve your overall well-being. Ken Lauher, a coach who helps people unlock breakthroughs in relationships and money, added, “Financial well-being can be directly linked to levels of stress, fear, self-doubt and anxiety. of somebody. When a person is calm, relaxed and feels grounded, the financial aspects have less of an impact on their choices. When a person is stressed because of their finances, it can impact all areas of their life. “

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So how do you avoid financial stress when you’re a victim of spend after spend during the holiday season?

Establish a budget

The first tip on every expert’s list wasn’t surprising, but it’s important. “Have a budget and stick to it,” Lauher said.

Josh Miller, Senior Vice President of KeyBank, added, “Once you’ve budgeted, you can put those funds aside, or start saving a portion of each paycheque, to meet that need and avoid dipping into cash. emergency savings.

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Of course, if you haven’t started saving for the holidays yet, it might be too late to put aside everything you need. In this case, Tony Molina, CPA and Product Evangelist at Wealthfront, advised starting with a list of who you need to buy and how much you would like to spend on each person, along with gift ideas in that price range.

“After you’ve written down your gifts, add everything up and determine if it seems like something you can afford without going into debt,” Molina said. “Unfortunately, many people spend more money than they can afford on holiday gifts, leaving them with credit card debt. No one wants to go into the New Year on the wrong financial footing. “

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Start early and look for sales

“If you’re a last-minute shopper, you might not have a good year,” Hamilton said, highlighting supply chain issues and rising prices as two concerns of middle-class consumers polled in the survey. One. If you can find the freebies you want, they might cost more than what you wanted to spend.

Molina emphasizes: “The earlier you start planning, the more time you have to research savings and find the best deals. Black Friday isn’t the only day to save money; retailers often hold sales during the holidays to attract shoppers.

Molina and Miller both recommend using apps to compare prices and receive notifications about in-stock items and price drops. “You can set price alerts online, where you will receive a notification if the price drops for an item on your shopping list,” Molina said.

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Create a safety net

Hamilton and Lauher both recommend having a safety net for times when circumstances force you to exceed your budget. “Have an emergency line of credit that isn’t a ridiculous interest rate if you have to keep a balance,” Hamilton said, noting that an online One bank account offers a line of credit with a low rate. 12% interest, which is lower than most credit cards.

Lauher added, “When a person has a safety gap, they make different choices and take different actions. Not only can this help reduce your general stress, it can also improve your ability to relax, rest, and restore yourself. Many people are so used to financial stress that they continue this cycle.

But how do you break this cycle? Lauher said, “To reduce financial stress, have a plan. When a person can take daily steps to help reduce stress and anxiety, it can have a positive impact on their income levels and the allocation of money for investments.

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Lauher recommends the simple step of starting to build a savings fund by scheduling a dollar amount each week to set aside. “If you have a bank account, have the money from your check automatically transferred to your savings account,” he says. “It’s less about the dollar amount and more about the habit and consistency of investing. “

Hamilton agrees. “These buffers – the availability of affordable credit and an emergency savings balance when you need it – can help provide peace of mind and sanity.”

See: Almost half of middle-class families can’t afford all the holiday gifts they want to give this year
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Avoid overspending

Overspending can be tempting, especially during the holidays. “Most people will match or overspend based on their savings and income,” Lauher said. “Just because you’ve saved money doesn’t mean you should be spending it. “

Instead of emptying your bank account for the hottest electronics of the season, spend more time and care choosing thoughtful and meaningful gifts for friends and loved ones. Remember the reason for the season and think about what you loved about the holidays as a kid. “Take a moment to jot down the things that made you feel rich on a childhood vacation,” Lauher suggested, reminding people that a specific meal, holiday treats, or the scent of candles can evoke feelings of being. wealth, peace and comfort.

By taking the time to enjoy the simple things, like houses around your neighborhood decorated for the holidays or local Christmas tree lights, you can reduce the stress of spending during the holiday season. “Often the feelings of wealth are less about the dollar amount and more about the feelings,” Lauher said.

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Protect yourself against credit card fraud

Another issue that could cause financial strain this holiday season is credit card fraud, which is currently at all-time highs, Hamilton said. He believes consumers should pay more attention to this potentially stressful event and take steps to protect themselves.

In the recent One poll, less than 20% of those polled said they were “very concerned” about credit card fraud, while around 47% were “slightly concerned.” More than a third were not at all worried or “not very worried”.

Yet credit card fraud can cost you time and money, and put the brakes on your holiday shopping plans if your account is breached.

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Hamilton recommends generating virtual cards or virtual account numbers to protect yourself online. “With the One account, you can create pockets of money for specific expenses or even specific websites. Then you can create a virtual card linked to this pocket. You can use this virtual card online, and if any of these websites are compromised, you just need to deactivate this virtual card without touching your primary One card, ”he explained.

This is especially important if you are shopping on lesser known websites, where fraud may be more likely. Overall, being mindful of everything from your spending and saving habits to where you shop can help you have a stress-free vacation and start the New Year feeling better with your finances.

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