Halloween night, a credit union member of yours threw a bucket of candy outside their door to satisfy the hordes of Trick-or-Treaters, then otherwise took the night off to slump into their couch to catch their evening TV. Inexplicably, considering the “spirit” of the night they see a Christmas commercial start up. Again, ON HALLOWEEN.
“Ugh, the holidays.”
More than not feeling the holiday mood so early in the fall season, it was the foreboding that another chunk of money out of your member’s finances was about to be sacrificed at the altar of Thanksgiving and Christmas in the coming weeks. A chunk of money that, unfortunately for them, they cannot afford to lose this year.
It’s all too common a tale in today’s America.
The member feels burdened by the expectations of the season, and doesn’t feel in control of their spending this time of year. In fact, for many consumers in the United States, the holidays can feel like an outright drag – a drag on their financial health, and, as a direct result, on their emotional health.
U.S. consumers dread the upcoming fall and winter holidays
The dread is real – a 2019 holiday spending survey found that 61 percent of Americans worry about the holidays due to extra spending, while 57 percent dread Christmas, specifically. Further, one in three consumers are losing sleep worrying about how they will pay for all of these winter holiday details.
A big part of it is that parents worry about disappointing their kids. Three in four parents of kids under 18 feel pressure to spend valuable income on holiday gifts. Many even recognize they may have to spend less on the holidays than previous years, and 69 percent claim their kids, of course, will be several degrees less than happy about that decision.
As a result, more U.S. consumers paid even more to get into the holiday spirit in 2021, even if it meant spending more than they could afford to keep their children and extended family happy. Between buying gifts, party supplies, decorations for the house, extra groceries down to even additional stops for gas for extra holiday errands around town, one in three consumers went into debt in 2021, owing an average of $1,249, according to CNBC. What’s more, only half of those surveyed expected to repay that debt within three months while others would need five. Most holiday borrowers with debt claimed to put it on their credit cards, except now, for the first time, almost 40 percent of U.S. consumers employed so-called “buy now, pay later” programs to afford the holiday expenses which, as QCash discussed in a recent blog, has often shown to be as financially unhealthy as predatory payday lending.
5 ways your members can budget during the holidays
In the mission to spread financial awareness and inclusion to credit unions and their members during yet another holiday season stress-test, here are some ways they can financially prepare and plan to soften the budgetary blow back:
Construct and adhere to a holiday budget
Once your members have calculated the numbers for how much you spent last year and completed planning their holiday schedule and gift list, they will need to create their holiday budget that breaks down that total into a monthly savings target. Important point: It is more than okay – even necessary – if they find they have to adjust their holiday plans to account for those budgetary totals. If saving the amount they need turns out to be untenable, it’s important to go back to the budget details and rethink the gift list, travel expenses, or budget down on the holiday celebrations.
Reconsider regular spending habits
If your members’ monthly savings goals remain just out of reach, dig in and consider areas they can trim their monthly expenses and place those cost savings into their holiday savings. One big expense for many consumers these days is restaurants and food delivery. Take a good, honest look at the amount of fast food or DoorDash receipts that are eating through your members’ budgets. Perhaps they could improve preparing more meals at home while eating healthier and saving money on top of it.
One more common expense? Take a look at members’ entertainment streaming services. They could be overpaying for subscriptions they either do not even watch or those they are willing to live without.
Find more disposable income
If a member is only earning enough to cover their essentials, perhaps they could consider other opportunities to earn extra income to help finance their holiday savings stash. Suggest a side hustle in their free time, a productive and valuable job even a few days a week that will help fund their holiday savings account.
Perhaps most important of all, that additional monthly income may provide that member a sense of financial stability and confidence. More than the holidays, the job can translate into less financial stress when bills are due, even creating a little breathing room to save for the future and start budgeting for retirement.
Plenty of holiday sales to go around
Consumers never have to wait long for a good sale to come around the corner. Shopping “holidays” like Black Friday, Cyber Monday, Small Business Saturday, or National Outlet Shopping Day enable shoppers to save on gifts for friends and family. Make sure to suggest to members they can sign up to receive email reminders from their favorite stores so they never forget or miss out on a sale or coupon advantage.
If a member finds they have some money left over from their gift list, remind them that they can and should transfer those savings over to another budget area – say their holiday travel expenses – to stretch those extra dollars where they are needed most.
Plan ahead for next year
For a member to find themselves in a financial crunch during the holidays is stressful enough. Work with them to ensure they are well set up when the next year comes around. Remind them to shop around for the right savings advantages while setting up an automated deposit schedule so they can stay on top of their holiday goals.
With the value these suggestions provide in a stressful season, your members’ trust and loyalty to your credit union can only grow through the holidays.