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Now that Thanksgiving, Black Friday and holiday shopping are just around the corner, you can almost hear people in stores saying to themselves, “This year, it’s going to be different. This year, I’m going to keep my holiday spending under control.”
It's easy to understand how so many people get themselves in over their heads during the holiday season, especially with the National Retail Federation (NRF) forecasting record total holiday retail sales (Nov. - Dec.) between $1.01 trillion and $1.02 trillion in 2025, surpassing the $1 trillion mark for the first time. This represents a significant increase, from 3.7% to 4.2% in 2024, with consumers planning to spend an average of $890.49 per person on gifts, food and décor.
While there's a strong awareness of budgeting - evidenced by 42% of shoppers starting early to spread out costs, and 63% actively searching for deals around Thanksgiving - the pressure remains high, particularly as 85% of shoppers anticipate higher prices due to tariffs.
Despite the best of intentions, the combination of high spending expectations and the urge to secure deals can easily lead to overspending, resulting in some people taking the entire next year or longer to pay off credit card bills, or even resorting to personal loans, a second mortgage or new credit cards just to buy holiday presents. To help avoid the January regrets, you can take a few steps to make your holiday shopping easier.
First, set a budget. Make a list of the people you want to buy for. Don’t write down the item you want to buy for each person. Instead, list the dollar amount you want to spend on each person on your list. Once you have compiled your list and determined the dollar amount for each person, total the list.
The next step is to ask yourself if you can afford to spend that much. If you discover that you can’t afford to spend your total, don’t dip into your emergency fund for gift giving. There are two ways to reduce that total. Either remove people from the list, or reduce the amount you want to spend on each person.
You might consider a nice handwritten note or some homemade cookies instead of a store-bought gift. For most people, it really is the thought that counts. In your budget for the holiday, don’t forget to include the cost of wrapping paper, tape, gift bags, cookie tins and any other supplies you might need. I recently ran into a store to grab some wrapping paper and a card for someone and it ended up costing almost $15 to wrap a $20 gift!
Once you have finalized your list and budget, go to the bank and withdraw that amount. If you don’t have that much in the bank, you need to go back and revise your list. You now know who you are buying for, how much you are spending and you have the cash in your hands. Now you can start doing your homework and finding the best deals. Before you go to the store or the mall, take your ATM card and credit cards out of your wallet. This will eliminate the temptation to spend more than you had planned. Put the specific amount for each person in an envelope and use just that envelope when you buy for that person. This will help to avoid overspending on any one person. If you do overspend on one person, you will have to take the amount from someone else.
Ignore the impulse buys, no matter how good of a deal they seem to be. I have a weakness for TVs. When I see a great deal on one, I must remind myself that I don’t need another TV, even at a bargain price.
Finally, remember what is most important. Everywhere you turn, you are being subtly or not-so-subtly encouraged to spend and consume more. Limiting what you spend doesn’t mean you can’t have a fun, beautiful and rewarding holiday season. The truth is that most kids won’t miss the 13th or 14th toy on their list if it doesn’t show up under the tree. In fact, limiting the number of gifts can help children learn to prioritize their desires and might even make them more appreciative of what they have.
The truth is that a few months or a year down the road, people will likely forget what they received last holiday season. However, the time that you spend together playing games, singing carols or baking cookies might be wonderful memories that last a lifetime.
As we approach Thanks-giving, we are grateful for this community and the wonderful people we’ve had the opportunity to work with over the last two decades. All of us at Beacon Pointe wish you and your family the most joyous of holiday seasons.
To hear the podcast of the Smart Money Management radio show on this topic, or others, go to our website at alderferbergen.com.
Important Disclosure: Alan Alderfer is a Partner, Managing Director at Beacon Pointe Advisors, LLC. The information contained in this article is for general informational purposes only. Opinions referenced are as of the publication date and may be modified due to changes in the market or economic conditions and may not necessarily come to pass. Past performance is not a guarantee of future results. Beacon Pointe has exercised all reasonable professional care in preparing this information. The information has been obtained from sources we believe to be reliable; however, Beacon Pointe has not independently verified or attested to the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal. Consult your financial professional for guidance specific to your circumstances.
