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Saving Money This Holiday Season

Saving Money This Holiday Season

Al Waller: The holiday season is upon us, and fortunately, as we continue to emerge from the pandemic, our gatherings and celebrations may finally be returning to normal – or at least in comparison to the previous two years. However, on the flip side, this year brings a new concern into the mix – there's always something – and that would be rising prices that could just make the return to normal holiday gift-giving, gatherings, and travel more expensive for consumers.
Welcome back to Clearpath – Your Roadmap to Health and WealthSM. I’m your host, Al Waller. Today, we’re joined by Catherine Collinson, CEO and president of nonprofit Transamerica Institute®, and she’ll be helping us brainstorm some ways to save money during the holidays.

Catherine, welcome back.

Catherine Collinson: Hi, Al. It's great to be back. What a long road we've been down! We're finally here, and people are able to get together and really celebrate – and in person.

Of course, we have to acknowledge that we may be done with COVID-19, but it may not be done with us yet. So, as we do get together in person, we also have to keep those precautions up, especially if we're around vulnerable individuals.

Al Waller: Agreed and good points. So, thank you for that reminder.

Now, for those who are able to enjoy more in-person activities this year – many, if not most of us are grappling with inflation and its effects on their holiday activities – and to that extent may feel uncertain about how much they should be spending.

Just to back up this sentiment, in a recent Harris Poll survey conducted in October – 81% of Americans believe the worst of inflation is still ahead. In light of this, it seems to make sense that the majority of Americans would be inclined to spend cautiously.

So, Catherine, let's help them by starting off with some of your spending tips for listeners.

Catherine Collinson: Al, that is a big question! And I think it's on everybody's mind. We are all feeling the pinches in our pocketbooks, and going out shopping has been an eye-popping experience – looking at how prices have changed so quickly and so dramatically.

So, as I'm thinking about money-saving tips over the holidays, I'm thinking in terms of 3 broad categories: gifts, get togethers or gatherings, and going places or travel. If you're up for it, I'd like to take each of these 3 areas one at a time.

Al Waller: That works for me. As a matter of fact, I recently spotted a November survey from U.S. News & World Report that shows that more than four in 10 respondents expect to go into debt paying for gifts and travel during the holiday season.

Catherine Collinson: Wow!! That is super concerning. We know interest rates are rising and the cost of that debt is going to be even higher. So, as far as our tips go, we are definitely not recommending that people go into debt.

The over-arching tip is that we need to spend what we can afford and no more. The best way to get started is to create a budget for all your holiday expenses – the even harder part is holding yourself to it.

Al Waller: I couldn’t agree with you more. It seems more important than ever, not only to deal with shifting prices, but also to account for any changes to traditions.

I’ll give you an example – I know a lot of people who traditionally exchanged gifts with colleagues refrained from doing this once they started working remotely. There were others who had to forgo in-person celebrations, and subsequently reduced their travel costs. In our current reality, change appears to be becoming a bankable constant, right? How would you advise folks to address these shifts when creating a budget?

Catherine Collinson: It's really important to level-set our expectations with our family and friends and colleagues, especially as it relates to gift-giving because I can say this for myself – I don't want any family members or friends going into debt to get me a gift. Likewise, we're all facing financial hurdles. If there was a time to be conservative yet creative in the gift-giving, this is the year.

One of the things is just planning – who are you going to give gifts to? Or [give] maybe just a card – or a phone call or a Zoom celebration? Or even [meet] in person? Maybe that is the gift. One thing that my family does is – I have a very large extended family – years ago, long before the pandemic, we decided to have a drawing. You pick a name, and then the gift limit is $50. Then we each get to focus on that person.

Of course, over the years we've had variations, especially for the younger generation, the kids – where Christmas is especially important. But that's one way – instead of buying gifts for 10 family members, you're just giving a gift to one.

Al Waller: Well, that's a great starting point, and I definitely endorse the drawing of a name – one name – to exchange gifts among family members.

As a matter of record, we've done that for years. Not only does it reduce the cost, but it personally, saves a lot of time and energy from running around buying multiple gifts for larger groups. In addition, I can vouch for this helping me with the gift-selection process – it makes it more meaningful versus just marathon shopping and going out and buying a bunch of gifs. So, I like that idea.

Now, given the budget should account for the 3 categories you reference: gift giving, gathering, and going places. Let's start with gift giving – what sort of tips do you have for saving money there?

Catherine Collinson: The first big tip, I already shared – and that is, creating that budget. In addition to creating a budget, make a shopping list, and of course, hold yourself to that shopping list. It's easy to get tempted and distracted and over buy or deviate from that list. The shopping list can really help you stay focused and adhere to your budget.

I also want to warn everyone – a trap that I know a number of people have fallen into, and I will say even myself, is when you're out gift shopping, avoid the temptation of buying gifts for yourself. There are so many items on sale right now, and after almost three years of a pandemic, many of us haven't spent that much time in stores – so the temptation might be great – but really, unless it's something that you need and you're going to save money, it’s probably best to stay focused on your very specific gift giving list, shopping list, and budget.

Al Waller: That all sounds pretty reasonable. But what about deals? I mean, it seems like Black Friday has stretched all the way back to the Fourth of July – I'm just kidding…I think. But seriously, my inbox is out of control and brimming with all these pop-up ads and special deals.

Catherine Collinson: Yes! And that's the second tip – more than ever, we have to be savvy shoppers. The deals…the emails…the inboxes…there are deals, deals, deals. There are a few thoughts that I'll point out on that – sometimes those “deals” aren't as good of a deal as you think. You could be lured in with one deal, and then all of a sudden, your shopping list goes off track and you end up spending more than you really thought you would.

The other thing about those deals is they really know how to get you with those impulse buys. So, you kind of have to put up your “impulse-buy Teflon shield” to protect yourself from that.

More than ever, comparison shopping is very important. Check out websites and apps that compare prices. Also, look at those who offer free shipping and those who don't. Look at the total cost of items, especially if you're ordering online.

Another tip is – this season, shop early. We've all heard about the supply chain issues, and that can increase the cost two-fold. One is just the basic inflation aspect of it, but two, the longer you wait – if certain items are running low or running out of stock, you could end up paying more because retailers know that they can charge more. Then of course, the closer you get to the holidays, shipping costs can go up as well, especially if you've procrastinated and need to pay for that extra rush shipping.

Al Waller: Well, I think you're right. Aside from putting on blinders when you go out to shop, I think being strategic is really, really smart. What you've just mentioned are very sensible tips that should be easy to manage, which hopefully makes them also easy to implement.

Now is there anything specific people should be wary of while doing their shopping?

Catherine Collinson: Yes, there are a few things to be wary of... There’s a new trending practice called “buy now, pay later,” or BNPL, which allows you to make a purchase with installment payments, with no interest and without opening a line of credit.

Al, that kind of sounds too good to be true. Whereas these programs can work for people in certain situations, there are some distinctive pitfalls to be aware of if you're going to go down that road.

Again, we talked about avoid going into debt, and for these types of programs, we say, “well, I'm going into debt, but there's no interest. I can pay later.” Read the fine print. Where people can find themselves getting into trouble is if they miss a payment or are late on a payment – penalties could kick in, as well as high rates of interest, which could make it even more expensive to pay later.

Also, there are indications from consumer reports and other organizations that if you go down this road with certain programs, if there is an issue with the product, it could be very difficult to get a refund or a replacement. So, there are some strings attached. Buyer Beware – not saying don't do it, but I am saying if you are considering doing it, tread lightly.

The other couple of things to beware of are opening new credit cards at the checkout stand. I think we've all experienced it. You go to buy something with your normal credit card. Then, at the checkout stand they tell you, “We can open a new card for you and save 15%.” That could be problematic in a couple of ways.

You have to be fully aware of the interest rate, but the other things are that it could impact your credit score. And people are human, Al. If you have more than a couple of credit cards that you're paying off every month – it could just become unmanageable and really easy to miss payments, not because you can't afford to, but you've just forgotten. That can result in higher interest rates, as well as paying interest on the outstanding balance and potentially even ding your credit rating.

Al Waller: Great points, Catherine. And you're so right – these buy now pay later offers really can seduce and potentially lead consumers into some very serious buyer’s remorse after the holidays.

So, any other shopping tips you'd like to share with us now?

Catherine Collinson: Yes, of course. Now is a great time to be creative and think outside the box. One thing that many of us from one time or another may have received is a gift card that we never used. Unused gift cards are big business – believe it or not. This is mind blowing – an estimated $3 billion in gift cards go unused each year according to Lending Club.

So, if you haven't done so lately, go through your wallet, or places where you may have put a gift card and then never gotten around to using it. You could use them as a gift, but they also could be a source for purchasing those gifts on your shopping list.

I've got a few more to share – another tip is focusing on experience rather than stuff. Maybe the best gift is to spend a day with the individual or family member or the kids – whoever it is that you were going to spend money on. Do something you love to do, have a new experience within budget, and then take photos to memorialize that time together.

Then the final thing that I think we should have a conversation about, Al, is regifting. A lot of people regift, and that's one way to give a gift to another. But it's kind of a slippery slope, at least in my own personal experience. If you're thinking about regifting something, if it's an item that you don't want or need, then you've really got to ask yourself – would the person receiving the regift want or need it? This is especially applicable to knickknacks, which can encroach on “white elephant” gift territory. Then of course – the big, big…yellow lights flashing…danger zone is – it's super important to remember who originally gave you the gift! If you forget, you could very well give it to the person who gave it to you and that never goes down well.

Al Waller: Oh yeah, I'm sorry…you're really taking me back – my dear-departed mother-in-law was prolific in this department, which she dubbed “trinkets, treasures, and trash”. And you are so right – if you do pursue this route – a word of caution to all regifters out there, make sure you don't send it back to its originator. I've witnessed that, and it can end up being a tremendous buzzkill.

But all getting aside, Catherine. You are one very sage and gifted shopper, and what I particularly appreciate is that these tips are more environmentally friendly than going out and making new purchases. Now, why don't we move on to the second area in which listeners may be able to save, and that's holiday gatherings.

Catherine Collinson: Okay, well let me just take you through a few ideas. I'm sure our listeners have thought of these too, but it's always good to have a little reminder.

  • Make the event a potluck and spread the meal costs among the group. This just takes a little coordination, so you don’t end up with all desserts and no mains. 
  • Consider recipes that typically use less expensive ingredients – and make them healthy. Transamerica Institute has a free series of cookbooks – the Healthier Traditions CookbookTM series – which includes lots of holiday favorites, such as cornbread stuffing, candied sweet potatoes, sweet potato pecan pie, and Philly cheesecake. Find all five of the free Healthier Traditions Cookbooks at www.transamericainstitute.org  
  • When grocery shopping, be on the lookout for items that are on special that you could save money or potentially substitute for other more expensive items. And don’t forget about clipping coupons – both paper and digital. 
  • Another suggestion is to use natural materials to decorate, such as colorful plants and branches from your yard or neighborhood. This saves money and reduces waste.
  • Lastly check out free local activities – ranging from light displays and holiday parades to concerts and performances. 

Al Waller: That's a great idea. Speaking of community events or actually lights, right here in Baltimore, residents in the Hampden section set up an amazing outdoor display of lights on our own 34th Street, dubbed the “Miracle on 34th Street” after that beloved holiday movie.

It is an extraordinary sight to behold with windows and yards filled and lit up with everything from Elvis Santas, hubcap trees, trains running on roofs…house to house – and lights strewn from one neighbor's home to the next and across the street. I mean, everybody gets into the act.

As I understand it, if you purchase a home on this particular street, it's expected (if not written into the contract) you're committed to maintaining this tradition. Catherine, I think I’m getting into the holiday spirit just thinking about it! All right, back to reality.

Let's move to the third and final category for our discussion, “getting there” or travel. I've got to believe that this would be a particularly challenging area to cut costs in this year, right?

Catherine Collinson: Well, it sure seems that way, especially as we look at all aspects of it. If you're driving, it's the cost of the gas. If you're flying, it's the air travel. Hotels can be very expensive right now. So, one of the most important things is just to prioritize your travel – where you're going, who you're visiting, and your accommodations.

Staying in a guest bedroom at a friend's house is, of course, going to be a lot less than staying at a hotel. So, if there was ever a time to prioritize travel, now's the time to do it – at least from a cost perspective. And even though I think many of us are burned out on Zoom calls, it's still a terrific option for seeing family and friends, especially those that live in faraway places.

Especially when it comes to air and hotel, if you can be flexible on your travel dates, that'll give you greater latitude to shop around and potentially pay a bit less – or at least help avoid paying top dollar. That flexibility can pay off. We realize the holidays are a tough time to do that because there's so much going on, but if you don't check, you won't find those deals.

If you're traveling by air, shop for airfares by the time, by the day, by the airline – there could be some deals there. And one other air travel tip that I want to highlight – and it requires being organized. You and your family can save money preparing for when you're going to be in transit to avoid expenses that you might not otherwise have to pay for. I'll give you an example – bottled water.

On ClearPath, we've talked a lot about the importance of staying hydrated, and we know that you can't take bottled water through airport security. The workaround is to bring empty water bottles, so that, when you get on the other side of security, you can fill them up and avoid paying for bottled water.

Something similar applies to snacks – a sack lunch or snacks to have while on the plane or in transit, that could also help save a lot. I think we've all experienced that things like food and bottle water just cost more at airports.

Al Waller: Catherine, thanks so much. You've certainly given us some substantial food for thought and practical ideas on ways to help cut back and save and even spend a little more time relaxing too. Here's hoping that listeners can find ones [savings tips] that suit them and help navigate with their budgets.

We also hope you’ll join us for future episodes. Please also check out past episodes on the Healthier Traditions Cookbook: Around the World and Saving Money During Inflation.

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about retirement security and the intersections of health and financial well-being. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

If you’ve missed any of our tips to save money – let us know. Send your comments, feedback, or ideas for future episodes, to Catherine or me at [email protected]

Until the next time, I’m your host Al Waller. Stay safe, be well and thanks for listening.

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Catherine Collinson is the founding president and CEO of nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies, and she is a champion for Americans who are at risk of not achieving a financially secure retirement. With two decades of retirement industry-related experience, Catherine is a nationally recognized voice on workforce, aging, and retirement trends. She was named a 2018 Influencer in Aging by PBS’ Next Avenue. In 2016, she was honored with a Hero Award from Women’s Institute for a Secure Retirement (WISER) for her tireless efforts in helping improve retirement security among women.