Check this out: According to ​Nerdwallet​, three-quarters of American shoppers plan to use credit for holiday shopping this year. Meanwhile, 31% of 2024 shoppers who used credit cards still haven’t paid off the balance. Did you read that? Almost a third of American shoppers still have holiday debt from last year. Buuuhhh!

Let’s look at this holistically and remember my favorite savings calculation of all time: $100 removed from your monthly budget now saves you $30,000 in retirement. More on this in a sec.

Does $4,230 sound about right?

According to the ​same Nerdwallet study​, Americans will spend an average of $1,107 on gifts and $2,586 on travel. And ​Beveragedaily.com​ tells us that alcohol spending goes up to about $537. Does $4,230 sound about right for holiday spending?

Ok so let’s reduce this number by $1,200. $1,200 is $100/month into your savings. $4,230 – $1,200 = $3,030. This is still a great amount to work with. Here’s what you’re going to do:

Drink less alcohol (gasp!!!) Aside from improving your physical health, relationships and meditation routine, not drinking alcohol is one of the best financial hacks of all time. If you simply must bring a bottle of wine to a holiday dinner party, find your favorite inexpensive bottle now and buy a case online to get a discount. My favorite cheap mocktail? Bubbly water, splash coconut water, big squeeze of lime, sprig of cute winter greenery, add a splash of rose water if you’re feeling fancy. So festive!

Use good ol’ Chappy (ChatGPT or Claude.ai or whatever your fave is), give it a list of names, and tell it your budget. As a side note, people don’t want more crap. Even if they think they do, they don’t. So do everyone a favor and put your money toward something else.

Tell Chappy what kinds of things these people value and ask for ideas for gifts that will be meaningful. You guys, I loved this exercise and am going to start working on my list now. Some of my favorites that Claude.ai came up with for me:

Custom jersey with name and favorite number for my 3-year-old nephew.

Tickets to a baseball game with family for my 79-year-old dad.

Dragon kite for my niece Celine who loves chaos and dragons.

Planetarium tickets for my daughter who
loves space.

Once you have your gift list sorted, move on to travel. Tell Chappster where you want to go, what credit cards and travel benefits you have, how much you can spend — let’s say $1,800 after gifts? — and what’s important to you. Ask Chappywappy to include a couple bonus activities to help you reduce holiday stress and maximize your health and wellness.

Now comes the awesomeness. You’ve saved yourself $1,200. If you recall from a previous newsletter, reducing $100 per month from your budget removes $30,000 from the number you need for financial independence. In short, when calculating your financial independence, you can reduce it by $30k if you can take $100 out of your monthly budget now. If you’re smart and invest that $1,200 each year, it could be worth more than $58,000 in 20 years, assuming a 7%-ish rate.

We all know you’re more generous when you’re not financially stressed. Wouldn’t it be awesome to be super wealthy when you’re 55 so you can buy first-class tickets for your family to Greece? Invest that $1,200 now and it will be the best gift for everyone.

Megan Janssen is the founder of Money Juice (www.money-juice.com) and a financial advisor with Forum Financial Management, LP. The ideas and language written here are those of the author and do not necessarily reflect the views or opinions of Forum. This column is never written by AI.