The average person spends around $900 on gifts for the holiday season, according to American Research Group. That figure doesn’t include other holiday expenses such as travel, food for gatherings, decorations, and more.
Some people even charge holiday spending to credit cards and end up in debt. Is that worth it? Most likely not.
Putting holiday purchases on a credit card creates a future obligation: you must eventually pay off the balance. Interest and finance charges can quickly increase a modest purchase into a much larger debt. That, in turn, can hurt your credit score, raise your debt-to-income ratio, and create long-term financial stress.
Going into debt for gifts and festivities takes away from the joy of the season. With a bit of planning and discipline, the holidays can be affordable without sacrificing meaning or celebration.
Below are practical, easy-to-follow tips to boost your holiday savings and avoid debt.
Set a budget.
Before you write shopping lists or start browsing sales, set a realistic holiday budget. Knowing how much money you can allocate for gifts and events helps you make better choices and prevents overspending.
Start by determining how much you already have set aside for the holidays, then estimate expected expenses and identify any shortfalls. Make adjustments so you stay within your spending limit.
Items to include in your holiday budget:
- Gifts
- Transportation and travel costs
- Food for parties and get-togethers
- Postage and stamps
- Holiday cards
- Wrapping supplies
- Decorations
Use cash when shopping.
Using only cash for holiday shopping is a simple but effective way to prevent impulse purchases. A cash envelope system forces you to plan purchases because once the cash is gone, you can’t spend more.
When you shop with cash, you’re more likely to distinguish needs from wants and to make thoughtful buying decisions.
Give just one gift.
If you’re short on time or money, consider giving just one meaningful gift per person. Many families exchange multiple presents, but focusing on a single, thoughtful gift reduces cost and stress while preserving the spirit of the season.
It’s the thought behind the gift that matters, not the number of items or the amount spent.
Get cash back on your shopping.
Take advantage of cashback programs and shopping portals that reward purchases you already make online. These services are typically free and can return a small percentage of your spending as cash or gift cards, lowering your effective costs.
Find ways to cut back right now.
Small, immediate changes can free up extra cash for holiday spending. Even an extra $100 helps. Consider:
- Cancelling or trimming cable service
- Switching to a more affordable cell phone plan
- Eating out less to save on dining expenses
- Negotiating car and home insurance premiums
- Putting a hold on a gym membership you rarely use
These adjustments can add up quickly and provide breathing room in your holiday budget.
Secret Santa is your friend.
A Secret Santa or gift exchange limits how many gifts each person must buy and can dramatically reduce family spending while keeping gift-giving fun. Exchanging one well-chosen present lets you put more thought into a gift and saves time and money.
Many families adopt this approach for adults while still allowing grandchildren or young children to receive gifts from multiple relatives.
Find ways to earn extra holiday cash.
If cutting costs isn’t enough, consider earning extra income for the season. Seasonal part-time jobs—retail stores, delivery services, tree lots, and restaurants—are common options. There are also many flexible side hustles that can generate supplemental income quickly.
Ideas to explore:
- Offer short-term services such as pet sitting, babysitting, or lawn care
- Rent out a spare room if you have the space
- Use rewards and survey sites to earn gift cards or small cash payouts
- Test websites, do microtasks, or take online surveys for pay
- Look into online freelance or gig work that fits your skills
Signing up for multiple small-earning opportunities increases your chances to earn consistently through the season.
Shop early.
Start holiday shopping as soon as possible. Many shoppers begin months in advance to spread costs and take advantage of sales. Shopping early reduces last-minute stress and the pressure to overspend.
When you have time to compare prices and wait for promotions, you’re more likely to find better deals and avoid impulse purchases made out of urgency.
Start saving early for next year.
If it’s too late to prepare this season, begin saving now for the next one. Small, consistent contributions add up: for example, saving $20 each week for a year yields $1,040 with minimal impact on your monthly budget.
Creating a dedicated holiday savings fund removes the need to rely on credit or dip into emergency savings when the holidays arrive.
Remember the true meaning of the holidays.
No matter which holiday you celebrate, focus on what matters most: spending time with family and friends and enjoying shared traditions. You don’t need to spend a lot of money to create meaningful memories.
How much will you spend this holiday season, and what steps will you take to increase your holiday savings?