Millennials generally aren't known for being strong savers. Often, they're critiqued for blowing their minimal earnings on things like gadgets, overpriced socks, and gourmet brunch. However, it looks like a large group of younger adults are about to make a very smart decision this holiday season. An estimated 35% of millennials say they plan to spend less than $100 on holiday shopping in the coming weeks, according to a survey commissioned by installment-payment solution Splitit. And that's a move that could help them avoid a world of financial upheaval in the months that follow.
A minimalist approach to the holidays
It's easy to get caught up in the excitement of gifting and sales during the holidays, but the problem is that many folks who do all that shopping can't actually afford it. Case in point: The average American ended the last holiday season over $1,000 in debt. Worse yet, 15% of U.S. adults say they are still paying off holiday debt accrued in 2017. The fact that more than a third of millennials are planning to keep their spending in check this year is therefore encouraging news.
That said, most millennials won't be sticking to that under-$100 threshold. And so they risk racking up debt or spending so much that they fall short on other financial goals. Therefore, if you're planning to spend a bundle this holiday season, ask yourself the following questions:
- Have I actually mapped out a holiday budget? If you take the time to prioritize the things you want and need to buy during the holidays, there's a good chance you'll find ways to cut some corners, thereby reducing your spending and lowering your chances of landing in debt. So list the people you need to shop for and the items you really can't live without, and make sure you're covering those before getting sidetracked with other purchases.
- Can I cover this spending with my paychecks? The last thing you want is to charge your purchases on a credit card and risk not being able to pay off that balance by the time it comes due. If the leftover money you have from your paychecks isn't enough to cover your spending, take a look at your cash reserves. There's nothing wrong with dipping into savings to pay for some extra purchases, provided you're still leaving yourself with at least three months' worth of living expenses in an emergency fund. But if that's not the case, be more judicious with what you spend.
- Are there better uses for my money? It's nice to be generous during the holidays, and it's also tempting to take advantage of good deals. And make no mistake -- there are some good deals to be had around the holidays, whether you're shopping for electronics, clothing, or furniture. At the same time, make sure your holiday haul doesn't stop you from meeting more important goals. For example, if you're itching to move out of your rental unit and really want to buy a home early next year, you're probably better off banking an extra $500 than spending it on various items in the coming weeks.
The fact that so many millennials are planning to curb their holiday spending proves that they're doing their part to avoid debt and meet their money-related goals. And that means a more financially sound start to 2019.