The idea of holiday shopping and striving to find that ideal gift often brings about stress. Personal finance expert Rachel Cruze from Ramsey Solutions engaged in a conversation with Dave Davis about holiday shopping spending boundaries.

Holiday Shopping Spending Habits

Dave began by questioning the allure of excessive spending during the holidays. Rachel pointed out that the holiday spirit of giving leads us to spend without much thought. We often forget to consider how much we're actually spending and if it's a wise choice. Many of us rely on credit cards, and statistics show that 28% of shoppers who used credit cards last year for Christmas still haven't paid them off. This highlights how credit cards have become a common tool for Americans, even in times of inflation. When we use credit cards during the holiday season, we tend to spend 12 to 18% more than when using actual money.During the holiday season, the average shopper spends about $1,700, which is an 8% increase from last year. Inflation plays a role, but our spending habits and expectations also contribute to this upward trend.

Creating a Zero-Based Holiday Budget

Rachel explained that a zero-based holiday budget involves planning out how much you'll spend on each person and ensuring it aligns with your savings. Listing out everyone you're buying for and setting exact amounts gives you control over your spending. It might mean adjusting your gift choices for certain people if your cash flow is tight. By doing this, you can enjoy shopping more without the worry of overspending.For example, if Aunt Rita usually gets a blender but your finances don't allow it this year, you can make a conscious decision to adjust. This way, you're not second-guessing your spending and can stay within your means.

Holiday Budget Inventory

Having a holiday budget inventory is crucial as we approach the holiday season. It means having cash on hand to avoid going deeper into credit card debt. To achieve this, you need to look at your everyday expenses and determine what can be cut for the next few months to free up money for Christmas. It could be cutting out restaurants for a month or two to ensure you have enough funds for the holiday season.By creating this margin, you're better prepared to handle the holiday spending without relying on credit.

Dealing with Subscriptions

Knowing when your subscriptions renew is important. If they auto-renew, make sure to cancel them beforehand to avoid being charged an extra month. This small step can save you a significant amount of money during the holiday season.

Contentment in the Holiday Season

Contentment is a powerful financial principle that is often overlooked. People who are content with their financial situation don't need more stuff to feel fulfilled. Studies show that having more things doesn't necessarily lead to happiness or joy. As Americans, we tend to accumulate more and more, but having contentment and peace during the holiday season is key. By living within your means and spending wisely, you can avoid stressing about debt repayment for the next year.Rachel, as an author and children's book author, emphasizes the importance of talking to kids about this. If their Christmas is different this year, explain it to them. Helping them manage their expectations can prevent disappointment on Christmas morning.