The holidays will be here before we know it, and while it’s the most wonderful time of year, it can also be one of the most expensive and stressful. With gifts, travel and entertaining adding up, how can we stay on budget and avoid financial strain? For this edition of On the Money, sponsored by Intuit Credit Karma, finance expert and author of “The Forever Paycheck” Jean Chatzky stopped by TODAY to share smart ways to save this holiday season.
This section is paid for by Intuit Credit Karma.
Oct. 10 is World Mental Health Day, and according to a recent survey conducted by our sponsor Credit Karma, 80% of Americans surveyed agreed that when their finances are in order, they feel in control of the rest of their lives.
It really can have a domino effect. When you feel more confident about your finances, that can take some of the stress out of other areas of your life. So, especially heading into an expensive time of year, it’s worth taking a little time now to get your finances in order and the holiday season can feel calmer.
Our sponsor Credit Karma has tools to help you stay on top of your holiday finances — whether it’s tracking your spending or using budgeting calculators to help you plan ahead.
Holiday finance tips seen on 3rd Hour of TODAY
Holiday Spending 101
- Spend 1%-1.5% of your gross income: As a general guideline, try to keep your holiday spending to around 1% to 1.5% of your gross or pre-tax income.
- Set limits: A good way to get ahead of it is to set your total holiday spending limit now. Look at what you spent last year if you need a starting point, then divide that number by the number of pay periods you have between now and the holidays. (Most of us have about five.)
- Save early: Move that amount into a savings account each time you get paid, and you’ll have a dedicated holiday fund ready to go.
How to save on gifts
Let’s start with gifts — this is where people usually spend the most money.
- Make a list — and make it smaller: Before you start shopping, look at everyone on your gift list and see where you can consolidate. Could a group of friends do a gift exchange or a white elephant instead of buying for everyone? Could you set parameters where everyone re-gifts something they’ve received in the past year?
- Consider charitable donations: Instead of buying individual gifts for everyone, you can make one charitable donation to many recipients. You can also give as much or as little as you you want — when charities send out thank you’s they don’t say how much they received.
- Don’t forget Green Monday: We all know about Black Friday and Cyber Monday, but Green Monday is the second Monday in December and the final push for retailers to mark down items they want to sell for the season. You can find major markdowns as retailers make their final holiday push.
- Shop with unused gift cards and points: About half of Americans are sitting on unused gift cards, sometimes worth hundreds of dollars. That can make a big dent in your shopping. And, if you’ve got unused frequent flyer points, you can often use those to shop as well. You’re not going to get the best value for each point, but if you’re not using then, why not.
How to save on holiday travel
Oil prices are surging right now and that has trickled down to travel. Whether you’re driving or flying you will feel the impact so you need to be strategic.
- Book your travel sooner rather than later: Set price alerts now and as soon as you see a fare that fits your budget, lock it in. Experts are saying if you wait for a last minute drop, you’re likely to get shut out.
- Use your points: The trend in points is devaluations — meaning they are going to be worth less six months from now than they are today, so by all means use them.
- Consider a hybrid rental car: If you’re going to be doing a decent amount of driving — hundreds of miles while you have the car, not short hops — renting a hybrid can work in your favor and help reduce fuel costs. Keep in mind, EV rentals are a tougher sell: You’ll need to find a place to charge the car so that you can return it with the same battery that you picked it up with.
- Compare your lodging options: If you’re traveling solo or as a couple and need one room, a hotel is typically the cheaper option. If you’re a family or group that needs more than one bedroom, an Airbnb situation often wins. One of the factors is food. If you don’t have to out every meal that represents a big savings, so if you’re going the hotel route, look for a room with a kitchen or kitchenette.
- Book refundable: In major cities, hotel room prices often drop in the days just before a holiday if they aren’t at capacity. If you book refundable, you can cancel and rebook to recoup the savings. Same with rental cars. On plane tickets, if fares fall you can often get a credit, unless you book basic economy.
Meet the expert
Our team features a range of qualified experts and contributors in our broadcast segments to reveal the latest in trends, remarkable sale events and all things shopping across a variety of categories.
- Jean Chatzky is a finance expert and author of, “The Forever Paycheck.”
