Avoiding the Christmas Hangover

It's the most wonderful time of the year! Everyone around you is cheerful and filled with glee for the upcoming holiday season. Holidays, especially Christmas, bring back joyful memories of time spent with family, great food, and gifts given and received for many. But it's not all Egg Nog and Sugar Cookies for many Americans. Holidays can be a stressful time of the year as well. Family and Friends may have waited all year to give and receive that special gift for a person they love. Many families stress out about what to buy, when to buy, and most importantly...how to PAY for it all! On average, according to the American Research Group, Americans plan to spend over $900 on Christmas gifts this year! Depending on your level of income, $900 can be a big chunk of change. According to the Pew Research Center: Middle Income (Fort Myers) $33,000 - Upper Income (Fort Myers) $98,000 (80% of Americans are below Upper Income Level) Middle Class Family . 29% of Americans (lower income) make less than $33,000 a year. 51% of Americans make between $33,000 and $98,000 (middle income). Now these numbers are based on a Family of 2. For a family of 4: Middle $46,000 , Upper $138,000.
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Now you may be thinking to yourself, $900 is not a lot of money in comparison to the amounts above, and you would be correct with a direct comparison. Using a Family of 2 as an example, for a middle income household, $900 would be between 1% - 2.7% of your total income. Ok, so that's still a small percentage right? There are however a few reasons why that is most likely not accurate for most Americans. Why you ask? Because those numbers do not account for TAXES! And Uncle Sam is coming every year just like the Grinch and Santa. After taxes, assuming a tax rate between 15% - 25% so we'll say 20%, that brings middle income down to a range of $26,400 and $78,400, and the percentage of income used for gifts up to 1% - 3.5% of your income. Another reason is most Americans are not saving all year to pay for their Christmas shopping! Most Americans are living paycheck to paycheck, and are likely spending that $900 average when they receive their pay near Christmas time! So using the same income levels above (in bold!), lets break this down to how much you would make in the month of December. For the month of December, not including any overtime or bonuses of course, our middle income monthly range is between $2,200 and $6,533. Making our $900 of average spending between 13.7% - 40% of your monthly income. Now this makes a huge difference! Especially if you're in the lower income bracket, close to the bottom of the middle income bracket, or have a larger family size. Your percentage of monthly income going towards Christmas gifts would be much higher than 40% if you're spending like the average American at Chrismas time!

And what people WANT for Christmas, especially kids, doesn't change drastically based on how much money their parents make. The kid with parents in the lower income bracket wants the same iPhone/iPad/Virtual Reality headset as the kid with parents in the higher income bracket. The only difference are the parents in the lower income bracket would be spending a much larger percentage of their income to get the same gift! If you're spending 40% of your monthly income at Christmas time, immediately after running the Holiday Gauntlet (Labor Day, Halloween, Thanksgiving) might I add, and you didn't save money throughout the year for it...then your'e likely going into debt to do it! About 50% of families use credit to pay for their holiday gifts, and only about 60% pay it off within 3 months time.

So what can I do instead??? What's the better way to handle Christmas time, and potentially still make my family happy during "The Most Wonderful Time of the Year"? Well it's 2 days before Christmas, and probably too late for you if you're reading it today! However, stay tuned for a few ideas in Avoiding the Christmas Hangover Part 2!! Be sure to Subscribe to our Blog for updates when new posts are released! Thanks for reading and sharing!