WASHINGTON — As the holidays approach, trips get scheduled, RSVPs for parties are sent and online shopping kicks into high gear. But, one thing that's likely not in celebration mode: your bank account.
On top of the typical financial stressors during the holidays, this season could be one of the most expensive yet as bills require a bigger budget than in years past.
This prediction comes from the U.S. Energy Information Administration’s (EIA) latest Winter Fuels Outlook, which says that many households across the country can expect to spend more than last winter, which is defined in the forecast as from October to March.
In Washington, D.C., budgets are getting pushed to new heights as inflation looms. Personal finance website Wallet Hub has predicted that the maximum holiday budget residents could afford in the city would be just over $1,650 in 2022. And that's not even within the top 80 maximum holiday budgets across the nation out of more than 500 cities, according to their research.
Wallet Hub defined this consumer as taking in a monthly income of $7,507, with $5,580 in monthly expenses.
There's no better way to spin it: the holiday season is a hard one when it comes to money management. WUSA9 sat down with a few experts to discuss how to deal with the ever-growing financial obligations during the holidays.
Carol Petrov, Vice President and Senior Relationship Manager for Rockville-based wealth management firm Kendall Capital, said it's best to start by focusing on your budget. And if you don't have one, be sure to pull one together.
First, start by paying bills and setting aside money for future necessary expenses. Contribute to your savings. After that point, it's a good time to begin considering what discretionary spending you have and mold that into your holiday budget, according to Petrov.
"Pay yourself first," she emphasized.
However, having a tight budget isn't the end-all, be-all. Petrov says one of the best money-saving hacks is to get creative with gifts or holiday events so that they don't overrun your bank account and to be sure to search for sales and deals. Plus, have conversations with family members, friends, kids and significant others so that everyone is on the same page and expectations don't shoot sky high.
Dr. Jaclyn Halpern also emphasizes those tips for anyone struggling to stick within a budget during the holidays. She's the Director and Co-Founder of The SOAR Program for Psychotherapy and Testing at Washington Behavioral Medicine Associates.
Halpern shared that money is often one of the primary stressors in romantic relationships, but that ultimately, any kind of relationship can be impacted by financial strain.
She said that anxiety is often one of the biggest factors you have to contend with when facing multiple expenses with a clear-cut budget.
"[That's one] negative outcome that I've seen in our practice in terms of people's responses to money stressors, particularly with things like layoffs or increasing bills . . . or if there's a mismatch in how one family member spends versus another family member, or member of a couple."
Sometimes, this kind of mismatch can even induce secondary depression, she said.
That's why it's critical to have conversations heading into the holidays about money expectations.
"How you interact with a child is going to be very different than how you interact with a romantic partner or, say, a friend," Halpern explained.
For romantic partners, it's often best to pick a set time and ask if they'd be open to having a conversation about what you feel your budget should look like going into the holidays. Halpern advises attempting to strike a tone that is simplistic, gentle and not accusatory. Using "I statements" also can help get your point across in a way that's well-received, such as saying "I'm worried about..." or "I'm feeling..."
"I'd recommend really thinking about collaboration and compromise and coming to an agreement that works for both parties," she advised.
When speaking to children, be sure to consider their age and maturity before starting as honest of a conversation as possible. Halpern says it's also important to level your own emotions before you start speaking in order to appear calm and regulated, as young people will often pick up on the emotions you display.
Plus, it's always important to leave space for children to express their emotions if they're feeling disappointed.
"Knowing a child might get upset, and being ready to respond to that with understanding and respect and emotional attunement, rather than trying to shut it down or reason with the child or bust them out of their response," Halpern said. "That's the main thing."
With family and friends, it's a good idea to be honest and work on money-managing goals together, Petrov said.
"You can all agree, 'Hey, guys, let's not go nuts here; let's all get together, let's bring a potluck meal together at someone's house, and bring a bottle of wine, but it can't be more than $10,' she suggested as a way to cut down on entertaining costs.
Halpern agrees, adding that one of the best ways to still enjoy the season while being cost-conscious is to come together with loved ones to figure out alternatives.
"Whether it's with a partner or a friend or a child figuring out . . . 'okay, we can't do this. What can we come up with, that might be fun? What might be special? What new tradition can we create together? How can we celebrate in a way that feels good . . . You really want this big thing and we can't do it for the holidays? How can we start to save for it? What can we plan?' she shared, encouraging being open-minded and creative in your problem-solving.
Always be sure to keep money anxiety in perspective as well, and know that if you overspend, you'll want to cut back in another area moving forward. If you're able to meet your basic needs, but are still facing anxiety over maintaining your ideal level of discretionary spending, a financial advisor or even a therapist could provide some relief as you work to meet your goals.
"I often use the analogy or the metaphor of, it looks like a mountain when we look up at it, but as we start to move through it, we realize it's more like a speed bump, or maybe a little hill," Halpern said of working through anxiety, acknowledging that therapy can be either or short term or long term solution, if it's not too much of an added financial burden.
"And so learning the coping skills to manage the anxiety, so that we can really put things in perspective is good; learning the skills for communication with a partner or a family member is important, finding that space to you know, decompress and work through feelings."