Dec 8, 2022 4 min read

Now that we have passed Thanksgiving, Christmas shopping will really accelerate.

Many businesses depend on holiday sales for a large portion of their profits. This is especially true for small business. Last year, supply chain issues made many items unavailable.

Consumers spent money differently because of the pandemic since vacations were canceled, people were working from home and many other challenges. This year the major economic issue will be inflation. We have not experienced these increases for 40 years.

While wages have increased, inflation has increased at a greater rate.

This means your holiday shopping budget will be difficult. It is important to set a shopping budget and stick to it. In general, people do not like to make written budgets or have to stick to them. When doing your weekly shopping, a written list can be a valuable way to stick to a budget. This is especially true in this time of high inflation. There is a difference between wants and needs. Needs are things that you would have to buy.

Wants are things you would like to buy. Reducing impulse purchases will benefit your cash flow, but Christmas shopping creates a different dilemma.

You are searching for the perfect gift for a loved one. It is still important to have a budget and show some restraint. This is especially important when considering buying gifts for grandchildren. They often have a very long list of items they want. You probably can not fulfill the whole list and it is not necessary to do so. Maybe discuss these desires with other family members and coordinate purchases. Buying the few most desired items is more satisfying than getting a lot of items.

Some families have Secret Santa drawings where they select a random name of an adult in the family and only buy for that one person. That way everyone gets a gift and it helps reduce everyone’s purchase requirements. Also, you can make homemade gifts for some people. Maybe you have a special cookie recipe or some other skill. Homemade gifts are often appreciated by a loved one.

Sometimes people regift items that they have received in the past and did not want. Be careful not to do so in the presence of the person who gave you the gift and especially not give it back to the person who gave to you.

Your regular household budget is already under stress because of inflation. Do not make matters worse by putting too many gift purchases on your credit cards. Household debt is currently soaring faster than it has in 15 years. All interest rates are higher than before because of the FEDs actions to slow inflation. Credit card interest rates are some of the highest. You may be paying 19% or more if you do not pay off your balance in full. Doing so should be the goal of every family. Do not only pay the minimum required payment. Your balance will take years to pay off.

Most economist expect us to have a recession in 2023. It will likely take some time for the stock market to recover all of its losses. Do not put your family under more pressure by overdoing Christmas shopping. A smart approach during this holiday season will make next year easier in what will probably be trying times.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.