Do you want to learn how to stick to your holiday budget?
The holiday season is approaching, and for many people it brings increased expenses and extra spending.
On average, people spend about $900 on gifts during the holidays.
That figure doesn’t include other holiday costs such as travel, food, decorations, and incidental items like postage, cards, and shipping.
A survey by MagnifyMoney found that American consumers carried an average of $1,325 in holiday-related debt in 2019.
Accumulating that kind of debt for seasonal spending can be costly. The same research showed holiday debt rose 34% since 2015.
If you think carrying holiday debt is acceptable, remember to factor in interest and finance charges, which can hurt your credit score and long-term finances.
Holidays mean different things to different people, but for most it’s about spending time with loved ones, not accumulating stress from debt. Going into debt for gifts diminishes the true meaning of the season.
One of the best ways to avoid holiday debt is to create and stick to a holiday budget. Below are practical steps to help you do just that so you can enjoy the season without financial stress.
Related resources for building a holiday budget:
- 8 Ways To Change Your Holiday Spending — Make This Year More Meaningful Than Ever
- 58 Random Acts Of Kindness
- The Complete Budgeting Guide: How To Create A Budget That Works
Here’s how to stick to a holiday budget.
Make a holiday budget NOW.
Start by creating a realistic holiday budget. Before listing everything you want to buy, decide how much you can actually afford to spend without compromising regular bills or your emergency fund.
Review how much you already have set aside for holiday expenses and be realistic about other obligations. Consider last year’s expenses to help anticipate costs—you may be surprised by how much you spent.
Your budget should account for recipients and events, plus travel and other seasonal costs. Typical items to include are:
- Gifts
- Transportation costs
- Food for parties and gatherings
- Postage and stamps
- Holiday cards
- Wrapping paper, tape, and supplies
- Holiday decorations
Once you’ve identified what you’ll spend on and set a spending limit, the next step is committing to that plan.
It’s natural to want to buy for everyone or to give bigger gifts each year, but sticking to a budget protects you and keeps the season enjoyable for both you and your loved ones.
Give fewer gifts.
The holidays don’t require buying gifts for everyone. If time or money is tight, reduce the number of presents you give. Keeping gifts meaningful often matters more than their number or price.
Many people adopt a minimalist approach, giving fewer but more thoughtful gifts and focusing on quality time with family and friends.
Don’t fall for all of those holiday deals.
Retailers use sales year-round to attract shoppers, and not every markdown is a true bargain. Watch for tactics like artificially inflating prices before marking them down.
Do your research so you buy the right items at fair prices and avoid impulse purchases driven by perceived “deals.”
Get cash back on your holiday shopping.
When shopping online, use cash-back services to reclaim a portion of your spending. These programs are free and can add meaningful savings during heavy shopping periods.
Find ways to cut spending in other budget areas.
If your holiday budget is tight, look for temporary or permanent cuts elsewhere to free up funds. Reducing regular expenses can also boost long-term financial goals like retirement or debt repayment.
Small changes add up—finding an extra $100 helps. Consider options such as:
- Canceling cable and using streaming alternatives
- Switching to a cheaper cell phone plan
- Eating out less
- Negotiating car and home insurance premiums
- Cutting unused subscriptions or memberships
Make extra holiday spending cash.
If cutting costs isn’t enough, consider ways to earn extra money. Seasonal part-time jobs and side hustles can provide the cash needed without tapping into credit or savings.
Opportunities include temporary retail or delivery work, dog walking, snow shoveling, house cleaning, selling unused items, completing paid surveys, or mystery shopping. Even modest side income helps cover gifts and other seasonal expenses.
There are many short-term options to explore; find one that fits your schedule and skills to earn extra cash for the holidays.
Try a Secret Santa gift exchange.
If your family or group typically exchanges gifts with many people, suggest drawing names so each person buys one thoughtful gift. A gift exchange reduces total spending and allows for more meaningful presents.
Start early for next year.
Some of the savviest holiday shoppers begin buying year-round. Spreading purchases across months reduces stress and can yield better deals as you avoid last-minute buys.
Starting early also avoids impulse spending and gives you time to watch for genuine discounts.
Start saving for next year.
If this year’s budget is set, begin planning for the next holiday season now. Use this year’s spending as a guideline and set aside a small amount regularly—daily, weekly, or monthly—to build a dedicated holiday fund.
Participating in a simple savings challenge, such as putting aside a consistent weekly amount, can help you accumulate a substantial holiday fund without feeling the strain.
Enjoy your holidays.
Remember the true purpose of the holidays: spending time with those you care about. You don’t need to spend a lot to create lasting memories. Consider activities like:
- Hosting a potluck dinner
- Having a baking day
- Planning an experience instead of a gift
- Calling or video-chatting out-of-town friends and family
Time and attention are often the most meaningful gifts. Prioritizing presence and connection keeps the season joyful without financial strain.
How large is your holiday budget this year? Are you planning to spend more or less than last year?
*Statistic cited from MagnifyMoney’s 2019 holiday debt survey.