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Education | Nov 20, 2023

Some Budgeting Ideas for the Holidays Amid High Inflation

Steven Kohler


Nancy I. Kunz


We’ve all felt the impact of inflation over the past two years. From filling our cars with gas, to paying for utilities, to traveling and buying food, everything costs more. With Black Friday upon us, holiday shopping could prove to be extra stressful for many this year.

In a recent survey conducted by Bankrate, 2 in 5 Americans say inflation will change their holiday shopping habits this year.¹ 84% of holiday shoppers questioned said they would try to save money this year, with 40% saying they’d be buying fewer items, 21% saying they’d be purchasing gifts from cheaper brands, and 41% saying they’d be seeking out coupons, sales, and other discounts.

All of these considerations may be an opportunity to adopt some important habits. To make sure you spend properly, you have to plan properly. This includes doing more research, and considering different, more convenient options to maximize the value of every dollar spent. Create a plan for buying gifts before you enter the store or start browsing online. Make a list with each item’s cost so you’ll know what your overall spending will be and make any necessary adjustments within the budget you set.

In general, people who don’t go deep into debt spend around 1.5% of their gross annual income on holiday spending. These people don’t make impulse buys. Instead, they show restraint when it is so easy to simply keep adding to your shopping cart – whether in-store or online.

When holiday shopping, there are some good self-imposed rules to follow:

  1. Set a spending limit: Instead of buying more than you can afford, consider picking a maximum spending amount based on money that you already have or can save ASAP.

  2. Make a list and stick to it: List everyone you're buying gifts for, and how many gifts you're planning to give each person. Then, assign a total dollar amount you'll spend on each person, including wrapping and shipping.

  3. Just say no: ‘Buying’ is purchasing an item you've already picked out. ‘Shopping’ is browsing. If you want to save money on holiday gifts, stick with buying just what's on your list.

  4. Pay with cash or debit card: Many merchants are promoting cash transactions to save on transaction fees. By using cash, you’ll save money on fees and credit card interest as well. In addition, relying on cash or a debit card can help you stick to a budget. The tradeoff is that you will not earn credit card reward points, which may be valuable to you depending on your rewards program and overall credit card strategy.

Inflationary pressures may call for a little creativity. Aside from traditional gifts, you may want to consider gifts that keep giving beyond today’s inflationary times. For example, you can contribute to a 529 Plan where earnings within the plan grow tax-free. Proceeds are also tax-free if used for qualified educational expenses.

There are other gifts that can help your recipients beat inflation. A cash gift works in any economic climate. For many friends and family, cash may be a welcome gift, whether you decide to offer crisp bills, a check, a Visa gift card, or send it via an electronic transfer.

The holiday season can be a stressful time emotionally and financially. Thankfully, a little preparation and planning can go a long way toward a joyful season for you and everyone on your gift list. Most importantly, take time to focus on experiences and be thankful.

¹ Bankrate, September 11, 2023

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

Steven Kohler


Chief Planning Officer

Nancy I. Kunz


Senior Financial Advisor

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