Ah, inflation. These days, we’re seeing it everywhere: cereal at $7 a box, drugstore mascara for $15, and oat milk lattes creeping toward the $8 mark. With the arrival of the holiday season, we can only expect those cumulative surging price tags to burn even bigger holes in our pockets. Whether we’re talking about the cost of our new winter coats, our flights home, or all those holiday gifts, we can certainly expect to find ourselves spending more than we’re used to over the next few months.
After almost three years of pandemic-related supply chain issues affecting everything from cars to toilet paper, it can feel like we’re still looking to make up for lost time in the retail space. It's high consumer demand (among other factors) that's at the core of our current financial woes. “Inflation is an indication of an overheating economy; there’s too much demand and not enough supply, and that consistently pushes prices up,” says Kristin O’Keeffe Merrick, a money expert at the family-run O’Keeffe Financial Partners, which provides a holistic, customized approach to investment and wealth management. As a result, “there’s been an interesting shift in consumer spending, because our allocation of resources has changed. If your fixed costs are rent, food, and gas, then the other parts of your life — travel, parties, shopping, clothes — are the variable costs. Those are what you have to control, especially if you’re spending, say, 25 percent more on everything this year.”
That said, there is some good news: While there’s nothing fun about cutting costs during the most wonderful — and expensive — time of the year, it is, indeed, possible to enjoy the holiday season and start 2023 off on solid financial footing. So how, exactly, do you lower expenses when saving money feels like it requires a deep-cut understanding of federal interest rates? All it takes is a little bit of planning and a healthy dose of creativity. “The best strategy is to have a strategy,” O’Keeffe Merrick says. “Don’t just put everything on the credit card and close your eyes. Know what you need, and know what you don’t.”
Scaling back may be easier said than done. But if higher prices have you feeling down, there are a few things you can do to spare your bank account while waiting for the economic chaos to subside (O’Keeffe Merrick predicts things will cool down a bit in 2023, as long as we see an overall increase in supply or a weakening in demand). Here are seven tips to make the most of your money right now.
1. Choose meaningful gifts over pricey ones
When it comes to presents, this is the time to think outside the box. “Don't start off the new year in debt just because you decided to go big over the holidays and spoil everyone with an expensive gift,” O’Keeffe Merrick says. “You can be thoughtful without being materialistic.” Consider framing a special photo, baking an all-time favorite dessert, or making a small donation in someone’s name (bonus points if it comes with homemade cookies). “If you have an activist in your life, making a $50 contribution to a fund they support would be a really powerful gift,” she advises.
2. Don’t sleep on coupons
Prices may be up, but so are end-of-year sales. Even if you’re buying something at a discount, how do you know you’re actually getting the best deal out there? O’Keeffe Merrick suggests downloading an app or browser extension, like Honey, that automatically searches for coupons and promo codes. “I don’t buy anything without running it through the app first at this point,” she says. “It doesn’t always work perfectly, but sometimes you’ll unexpectedly get 20 percent off. Coupons are a great way to be strategic.”
3. Know when to use a credit card
“Using your credit card to earn rewards right now is a great strategy,” O'Keeffe Merrick says. If you're in the market for a new card, it's the perfect time to sign up for one, too. The perks that come with opening an account this season are good, and what's better than earning a little financial *reward* for yourself while you shop for others? For instance, Chase Freedom — which already offers cash back on everything from dining to travel purchased with a Freedom Flex℠ card — currently has some enticing deals for newcomers: Within the first three months of opening a Chase Freedom Unlimited® or Freedom Flex card, you can earn $200 when you spend $500 in purchases. Plus, starting January 1st, new cardmembers can also earn 5 percent cash back at the grocery store (excluding Walmart; still a huuuge win during inflation), at Target (on purchases up to $1,500), and on the gym memberships that go hand-in-hand with the start of a new year (#resolutions).
4. Shop small for better value
“There are so many ways to be impactful in your spending, and supporting small businesses is one of them,” O’Keeffe Merrick says. “If you want to buy, for example, a cute pair of slippers, and you also like to support female-founded brands, it’s worth doing a quick search online to spend your money where it matters.” Local mom-and-pop type shops are also worth visiting in person, she says. “You can get more value when you shop at smaller businesses right now. Places like jewelry stores have a ton of inventory and the owners are more willing to make deals because they’re worried about a potential recession. Negotiating is a great benefit of shopping small — and in person.”
5. Know which big purchases are worth making
Even if you can spend a bit more right now, it’s still best to hold off on any big ticket purchases. “This is an uncertain time, and it’s crucial to be strategic about spending,” O’Keeffe Merrick says. “If you can afford something major, great — but if that money is better used somewhere else, consider that, too.” Due to rising interest rates, it’s not a great time to buy a car or a home. Even travel prices have skyrocketed. But if you’re looking for electronics or appliances, it’s actually a decent time to buy them because "those prices have come down significantly as supply has increased,” she says. “We’re no longer dealing with nine-month waits for refrigerators.”
6. Look for budget-friendly imported goods
“Buying things from Europe right now is actually a decent idea, because the Euro has collapsed in comparison to US dollars,” O’Keeffe Merrick says. “Currency rates are favorable, so imports like wine are cheap compared to other products.” While you can leave your local wine shop relatively unscathed, the same can’t be said for the grocery store. “The cost of food is really outrageous right now, and I actually don’t think it’s going to come back down. This is likely to be the new normal.”
7. Understand — and accept — your financial situation, whatever it may be
In a year when inflation is up and income is largely down, you’re not alone if you feel like you just can’t swing certain things (even if they used to feel reasonable). Whether your holiday shopping list is shorter (does your aunt really need a new sweater?) or you need to skip your annual family trip, stick to what feels doable — and be honest about your situation. “It’s important to be communicative about times being tough,” O’Keeffe Merrick says. “If you have to cut back, tell your family that it’s going to be a different type of holiday season.”
Don’t forget to remind yourself of the same thing. While shopping for a New Year’s dress might not be in the cards right now, there are some pretty great rentals out there. And since you’re never going to wear those sequins again, you might as well put the money you saved toward some (still) reasonably priced Champagne.