Inflation, rising interest rates and recession risks are less welcome during the holidays than crazy uncles, uninvited guests and that person who bought Thanksgiving pie at the supermarket.
But high prices, bigger price tags, heavier debt-carrying costs and economic uncertainty are here this year, and they will make most of us as uncomfortable as that uncle belching and unbuckling his pants when the Thanksgiving meal is done.
The question for consumers is how they will handle these unwanted guests, and how they keep financial concerns from ruining the holidays.
While there are dozens of studies showing how consumers have been feeling about inflation, what the research really seems to show is a disconnect between the complaints people are voicing and the actions they’ll be taking.
Roughly one in five Americans expects to feel pressured to spend more money than they are comfortable with buying gifts this year, according to a Bankrate.com study, with younger generations feeling pushed more than their elders. About 30 percent of all adults say they will need either a “buy now, pay later” plan or will take on credit-card debt that they won’t pay off for multiple cycles to complete their holiday shopping.
A WalletHub survey showed that 50 percent of Americans say that Santa won’t be as generous this year, due to inflation.
But other research from both of those firms and others suggests that having those worries is not the same as acting on them.
While half of the people said Santa will be less generous, just over one-quarter of respondents said they expect to spend less than last year on holiday shopping. Several other polls from shopping sites showed that most consumers believe that, in the end, they will do no more than hold the line on spending from 2021 levels.
The worry is that people will stick to that budget right up until they see that their dollar doesn’t go as far amid inflation at 40-year highs, and then go out to overspend because they can’t bear to see a sparser collection of gifts under the tree or next to the menorah.
Gifts are fun, cutting back sucks.
Yes, we live in times when holding spending flat can, in some ways, be viewed as economizing, but most consumers will be much better off changing habits, altering some long-held behaviors and finding ways to make their money go farther.
Here are four steps for doing just that; follow through on these items before heading online or toe the mall to do your holiday shopping and it may remove some of the inflation Grinch pinch this year.
Start by shopping for better prices on items that aren’t tied to the holidays.
Cellphone plans, insurance coverage, internet access/data packages and any number of subscription services tend to get cheaper over time.
That great plan you signed up for years ago may be outdated and costly today.
An old example: I remember when my mother was thrilled that she could get America Online access for $5 per month. Unfortunately, long after she had stopped using the service to get internet access — and years after AOL had gone to a free model for anyone who requested it — she was still paying for it. Small dollars, maybe, but no bargain when they were completely wasted.
Likewise, I spoke recently with a friend who didn’t want to go through the hassle of changing cellphone companies. I asked how much it had to be worth for the hassle and he said $500.
We made a small wager on whether he could save that much by investigating alternatives. That spurred him to shop around, he’s now got a different phone plan, but he saved hundreds of dollars just on his fourth-quarter bill. (Side note: Thanks for the 20 bucks, John.)
Moreover, in seeing his results, I think there is more savings to be had on my account, the moral of the story being that these items should be “shopped around for” every few years.
Talk to your loved ones. This is the rare time when nearly everyone has similar complaints.
We all know that person who replies to “How’s it going?” with “I’d complain, but no one would care.”
Right now, everyone cares, at least about the common problems we’re facing.
For proof, the next time someone asks how you’re doing, give them something like “Filled up your gas tank lately?” or “Been to the grocery store?”
You’ll see in a flash that we share common concerns, which means that we can come up with comfortable solutions.
That may mean altering the traditional gift giving; so that each child gets a gift from one aunt or uncle, but not the whole clan, allowing the parents to spend more on their own children.
Or perhaps it is offering gifts that have little or nothing to do with money. Arrive with a homemade pie, give a lasagna so that your sister/brother/parents/friends get an easy night at home; make gifts less ostentatious and more practical and meaningful.
No one who loves you wants you going into debt on their behalf.
Talk frankly about money now; the usual taboos are relaxed when it’s top-of-mind for everyone.
Find gifts that ease their financial concerns.
Listen to what someone moans about. Their complaints are your shopping list.
If they’re bugged by the high price of coffee on the way to work or cutting back on how often they get the car washed, or bellyaching about the cost of gas and groceries, buy them a gift card and take away their grumbles for a day or more.
You stay on budget; your money goes straight to lifting one of their complaints.
If you truly need nothing, say it and mean it.
We all love free stuff, and whatever our friends and family buy us is free to us. But if you truly need nothing and you know that someone is upset about their lot in today’s economy, give them a gift by lifting the burden of buying you anything.
If you don’t want inflation and higher prices to ruin the holiday season for you or your loved ones, don’t let it happen. That’s more about your words and your resolve than your wallet.