From shopping strategies to debt control, here's your financial plan for the 2025 holiday season.
This Week in Spending: A Focus on Holiday Shopping
I was caught off guard by the wave of sales emails flooding my inbox the other day: 25% off sitewide at Jenni Kayne, 25% off everything at Rag & Bone, and 25% off at Lulu & Georgia. I could list more! After many retailers hinted that discounts wouldn't happen, here they are, just in time for the holidays.
While the deals may not be as generous as in previous years, as one expert pointed out, retailers are clearly encouraging shoppers to buy early. Due to concerns about timely deliveries, many are over-purchasing. One in five shoppers admits to buying extras to return later, which combined with inflation could lead to disappointment. Here are some insights to keep in mind.
All I Want for Christmas Is... A Genuine Bargain
It's more than just shrinkflation — where products shrink in size but not in price — that's affecting your holiday budget. Marketing expert Utpal Dholakia shared how you're often paying more for less. This includes practices like unbundling, where travel prices remain steady but fees for bags, meals, and snacks are added. Similar trends occur in fashion, where lower quality materials are used, and loyalty programs offer less value.
One enlightening part of the discussion covered membership costs and how they impact total prices — something many shoppers overlook. I recently spotted 12 oz. bags of my favorite coffee on sale, while the larger 18 oz. bags weren't discounted. Checking the unit prices revealed that the smaller bags were a better deal.
Deck the Halls While Managing Debt
A recent report from the Federal Reserve indicated that consumer debt reached a record high in the third quarter of 2021. While this surge largely stems from mortgage debt, it's becoming increasingly favorable for credit card companies. A CreditCards.com survey found that 60% of credit card holders anticipate increasing their debt this holiday season. If you feel overwhelmed, consider opting for Secret Santa gift exchanges to simplify your list. Focus on the celebration itself as a gift. And when it comes to children, regifting can be a smart strategy. Many community members have embraced this approach, as seen with the Buy Nothing groups that are growing across the globe.
Facing Inflation Head-On
There are additional factors to consider this week. Financial expert John Wasik discussed how to mitigate inflation's impact on your retirement savings. While Social Security checks will increase by 5.9% — the highest adjustment in four decades — other rising costs could quickly negate those gains. For instance, Medicare Part B premiums are set to rise by 14.5%, bringing the standard monthly premium from $148.50 to $170.10, adding up to a $259 increase annually for individuals.
So, aside from maximizing Social Security benefits, what's the game plan? Wasik suggests estimating Medicare expenses and contributing to Health Savings Accounts, which can be invested and withdrawn tax-free for many health-related costs. Ensure your long-term care insurance includes a cost of living adjustment, and consult a financial advisor if you're uncertain about your financial path.
Time to Prepare for the New Year!
It's never too soon to — in the spirit of our favorite snowman — give your finances a warm embrace to kick off 2022 in the best possible shape. Here's the lowdown.
Wishing you all a joyful Thanksgiving!
