28% of Americans Are Cutting Back on Holiday Spending. Should You?

Will inflation mess with your holiday plans this year?

Some people can't stand the holidays and think they're silly and overblown. But for others, there's nothing more magical than the holiday season, and they're willing to spend a decent chunk of money to maximize the experience for themselves as well as their loved ones.

This year, however, the holidays might look different for a lot of people. And we can point a finger at inflation for that.

Inflation has been rampant all year, and it's been the source of credit card debt for a lot of people whose paychecks are no longer going as far. Because living costs are soaring, consumers are increasingly being forced to make difficult spending choices. And for some, that might mean cutting back on holiday spending. That's something 28% of consumers intend to do this year, according to the recently released BMO Real Financial Progress Index.

If money is tight at this point of the year, then you may have to come to terms with the idea of making changes to your holiday celebrations. But that doesn't have to mean denying yourself the magic you otherwise look forward to.

How to enjoy the holidays for less

There are certain aspects of the holidays you may be really sad to give up. The solution? Don't give them up. Instead, find a way to make them cost less.

Let's imagine you usually adorn your home with lights and decorations. Instead of going all out, buy a tasteful wreath and put up a few strings of lights instead. And if you have kids, enlist their help. Have them draw pictures you can hang up inside your home to brighten the mood.

Meanwhile, if you typically host a large gathering, consider paring down your guest list to keep your costs lower. Or, invite your usual crowd, but make it clear that everyone needs to chip in, whether by bringing an appetizer, a dessert item, or a bottle of wine. It's common practice to not show up to a meal or party empty-handed anyway, and if you assign your guests specific items to bring, you can cut down on your own costs.

Finally, focus on giving gifts from the heart rather than pumping your entire paycheck into retailers' pockets. If you have an avid baker in your family, instead of buying the $60 cake pan they've been coveting, give the gift of a booklet of your favorite cake recipes. You don't need to spend a lot to come up with gifts that are meaningful and appreciated. 

Don't start 2023 off with debt

Spending what you usually do on the holidays is a move that could backfire this year by driving you deep into debt. So don't set yourself up for a disastrous start to 2023. Instead, make an effort to scale back if you're strapped for cash. 

The key to a joyous holiday season is your attitude more so than anything else. Maintain a positive one, and you'll be able to roll with whatever spending changes need to come down the pike.