18% of Americans Say They'll Spend More This Holiday Season. Here's Why You Might, Too

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  • You may be inclined to trim your holiday costs if money has gotten tight.
  • Unfortunately, circumstances outside of your control might cause you to spend more, not less.
  • It's best to approach the holiday season with a plan and a budget so you can set your spending priorities.

You may end up with higher bills even if you're careful.

The holidays can be an expensive time of the year -- there's no question about it. Between gifts, travel, decor, and parties, it can be difficult to keep your spending in check.

This year, however, a lot of people have to keep their holiday spending to a minimum. Inflation has created a financial crunch for many households, and if you're already sitting on credit card debt, it's best to do what you can not to add to that load.

In a recent survey by Bank of America, 45% of respondents said they plan to spend less this year on the holidays compared to last year. But 18% say they plan to spend more.

Even if your goal is to cut your holiday spending this year, the reality is that certain costs might come in higher than expected due to none other than -- wait for it -- inflation. And that's something to be mindful of.

How to avoid going overboard

This year, the cost of everything from food to toys to apparel is higher. And so you might end up cutting items out of your holiday shopping list but spending more than you did last year anyway.

If you want to avoid landing in massive debt this holiday season, your best bet is to take a look at your savings and checking account and see how much you can afford to spend without accruing a credit card balance you're forced to carry forward. That will give you a baseline to work with. And from there, you can prioritize your purchases by order of importance.

So, let's say you've been working a side hustle these past few months, and as a result, you now have $1,000 in savings you can afford to spend on the holidays. Let's also assume you plan to squeeze an additional $500 out of your upcoming paychecks from your regular job. That's a $1,500 budget you can allocate to holiday spending.

Now you may want to travel home for the holidays. A plane ticket may have cost $350 last year, but it might cost $450 this year. Price out your options so you know what you're dealing with.

Next, decorating your home might be super important to your kids. If the cheapest way to pull that off is to spend $300, you're at $750 -- half of your holiday budget for the year. That leaves you with $750 to spend on gifts, including courtesy items you bring to the parties you plan to attend. And from there, you can shop around for gift options that fit into that framework.

Don't hesitate to adjust your plans

Certain holiday expenses might cost more this year than last due to inflation -- and there's not a whole lot you can do about that. Your best bet, in that case, is to put yourself on a budget and set priorities so you can make the most of the funds you have available.

In the aforementioned survey, 39% of respondents plan to buy fewer expensive gifts this year. Another 39% plan to buy fewer gifts altogether. These are strategies you may want, or need, to employ to keep your holiday spending at a reasonable level at a time when inflation is still soaring.

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