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Christmas presents

Christmas Is Not an Emergency

It’s the most wonderful time of the year – but for many consumers, it’s also the most financially stressful time of the year. Christmas presents and holiday parties can get very expensive very quickly. The problem is most consumers don’t plan ahead for this annual event, and as a result, they use their hard-earned emergency fund to cover the costs. Emergency funds are for emergencies. The definition of emergency is an unforeseen combination of circumstances that calls for immediate action. Christmas is not an emergency, and it’s definitely not unforeseen. 

Holiday shopping is not a reason to use your emergency fund or go into debt. Gallup reports more than a third of U.S. adults plan to spend more than $1,000 on holiday shopping. If you put that $1,000 on a credit card at the current average interest rate of 18.43% (LendingTree), and you make minimum payments every month, it will take 4 years to pay it off! And that’s if you never miss a payment or swipe the card again. To prevent this, here are nine tips to avoid holiday debt and emergency spending.

1. Create a separate holiday fund throughout the year.

Work on building this fund throughout the year, whether it’s a change jar when you spend cash, or a portion of each paycheck. There may be times when money is tight and you can’t contribute, but do what you can. Then when Christmas comes around, whatever is in that jar is your entire budget and your challenge is to stick to it strictly. 

2. Consider your financial position.

Are you still paying off Christmas from last year? How long did it take you to recover from what you spent? Are you prepared this year so you don’t need to account for a recovery period? Do you plan to spend more or less than last year?

3. Set your budget in advance.

Whether your spending limit is $20 or $2,000, make sure it fits into your regular budget before you spend it. 

4. Avoid using credit.

If you have a hard time keeping credit under control, avoid credit altogether. No credit card. No layaway. No buy now, pay later. And don’t spend your Christmas bonus before you get it.

5. Not all gifts are treated equally.

Sometimes, you find a really great gift for one person. Then you feel pressure to spend the same amount of money on everyone, but that causes you to triple your budget. Just because you spend $50 on one person doesn’t mean you have to spend $50 on everyone. Put equal thought into the gifts, not necessarily equal money.

6. Buy gifts throughout the year.

If the gifts you want to give aren’t perishable, or aren’t things that can be grown out of, stock up throughout the year. This helps spread your budget throughout the year, and it means you’ll have your shopping done before all the retail chaos. Maybe there’s a good deal on barbecue equipment in July and it’s the perfect Christmas gift for your husband. By the time Christmas comes around, there’s no need to spend emergency money because you already have all your gifts ready.

7. Make family gatherings potluck-style.

Hosting a dinner can be really expensive. But when everyone brings something to contribute, you as the host can buy just the Christmas ham instead of the ham, fixings, sides, drinks, and desserts.

8. Use credit card rewards.

If you have an expense credit card that you strictly pay off every month, you can take advantage of all the rewards without having to pay interest. Most credit cards offer some sort of reward such as 1.5% cash back. Collect your reward money and stash it away as a holiday shopping fund. It’s like getting all your Christmas shopping done for free! And when you use that expense credit card to do your Christmas shopping, you’ll get another 1.5% cash back on top of the reward you’re already using, and you know you can pay it back immediately since you already had the fund set aside.

9. Set an example.

If the reason you’re tempted to go into debt for Christmas is to buy gifts for your children, think about the financial example you are setting. Setting a good example for proper financial management is a much more valuable gift than a video game console.



Avoiding debt does not mean cutting out holiday gift-giving altogether. At 101 Financial, we believe in giving back – in fact, sharing is one of the Three S’s of Money. But it’s important to be prepared ahead of time to avoid emergency spending and to ensure you are financially stable. By planning ahead, budgeting beforehand, or shopping throughout the year, you can avoid the temptation to panic-buy presents and “dip in” to your emergency fund. Doing so will grant you peace of mind and will reduce financial stress around the holidays. A stress-free holiday means it really can be the most wonderful time of the year.

Find out how 101 Financial’s Workplace Wellness program teaches the fundamental principle of better budgeting and can help with holiday shopping preparations.