The holiday season is fast approaching. For many people, the holiday season is filled with joy and excitement, but for others, it’s filled with heightened financial stress and anxiety. In general, nearly half of US employees (48%) are stressed about finances, and when you add the pressure of the holiday season, that stress reaches an all time high. This is especially true for households with children. For them, the holiday season typically starts with Halloween and ends with the New Year. Each holiday comes with its own expenses and some people aren’t prepared for it. Many of them have a hard time saving money in general, so it should come as no surprise that they’re also ill-prepared for the holidays. 

In fact, the 2019 Federal Reserve Survey revealed that four in 10 American adults wouldn’t be able to cover an unexpected $400 expense with cash, savings or a credit card charge that could be quickly paid off. This means they likely wouldn’t be able to cover the expenses associated with the holiday season either. This forces them to resort to high-interest debt like credit cards (56%) or payday loans (5.4%). Finder reported that 134 million Americans would go into debt because of the holidays and many of them will take an average of 4.5 months to pay it off. This only contributes to the vicious cycle of debt many of them are already in.

The vicious cycle of debt often begins with an unexpected expense. For example, let’s say it’s the middle of winter and a single mother of two needs to fix her boiler. She needs $500 to fix it but she has no savings. Her only option is to borrow money to get the boiler fixed. To make matters worse, she has bad credit so she has to take out a payday loan. This means high-cost debt, increased worry, stress, and depression. Now she’s paying an interest rate of 400% on a $500 loan — worsening her financial stress. Her income is now less than her expenses, leaving no room for savings or any other unexpected expenses. But the holidays are fast approaching and she wants to be able to provide for her two children. She then turns to another payday loan and the cycle continues.

By now, you may be asking yourself: are the holidays really worth getting further into debt for? Many people may say ‘yes’ because, as a recent Credit Karma survey shows, 43% of people feel debt is unavoidable during the holidays. For them, it’s more about the gift of giving and the satisfaction of making their loved ones happy. This is especially true for women because they are likely the ones doing the shopping and they’re statistically more financially stressed than men to begin with (51% v. 41%). Either way, it’s important to note that financial stress comes with a multitude of side effects including sleepless nights, depression, anxiety, inability to finish daily tasks at work, and troubled relationships with colleagues. In other words, their personal finances are taking a toll on their lives at home and at work.

To combat financial stress, employers are beginning to offer financial wellness solutions as part of their benefits package. Financial wellness solutions help employees get out of debt and into saving, so when an unexpected expense hits, they’re better equipped to handle it. Financial wellness solutions also have benefits to the employer including improved retention and productivity. 

If your employer doesn’t offer financial wellness solutions, there are still things you can do to better prepare for the holiday season. Here are a few tips to follow…

  • Assess the situation – To take control of your finances, you need to understand your current situation. Write out what you earn each pay period, your regular monthly bills, and if you have any debts, including credit cards, overdraft fees, or payday loans. 
  • Avoid taking on more debt Stay away from high-interest credit cards and payday loans whenever possible. This will only hurt you in the long run.
  • Spend smarter – Save first, spend later. If you have a strong preference to spend rather than save, try to avoid that behavior starting today. When you receive your paycheck, put some of it into savings (even if it’s a small amount). Any amount you can save will help. 
  • Build a buffer – Having savings will allow you to deal with unexpected costs and stop you from depending on credit cards, overdraft fees, or payday loans. Again, it doesn’t matter how small you start, as long as you can commit to a regular amount.
  • Set goals – Your goals can be anything but in this case, you’ll want to focus on holiday expenses. Try to avoid impulse shopping. Create a shopping list and be sure to only buy what’s on it. Be sure to look for the best deals and limit your spending as much as possible. Take advantage of deals on Black Friday and Cyber Monday.
  • Ask your employer for help – Find out if your employer offers financial wellness solutions. Is there a program you can enroll in?

For instance, some financial wellness solutions like Salary Finance give employees access to low-interest salary-linked loans at no cost to their employer. So imagine if the woman in the broken boiler example had access to financial wellness solutions through her employer, her situation might have turned out differently. When her boiler broke down, she could have taken out a salary-linked loan to pay for the repair rather than taking out an expensive payday loan. With the regular repayment from salary, her credit score would improve and she’d be happier. In this situation, her worry, stress, and depression would decrease. Her savings would start to increase and she’d be prepared for unexpected expenses and the holiday season.