Personal Finance
10 Ways to Avoid Overspending This Holiday Season
What You’ll Learn: How to avoid overspending during the holidays
EXPECTED READ TIME: 9 MINUTES
The holiday season has become synonymous with giving, receiving, and in many ways, shopping. While it’s easy to get caught up in the excitement of it all, spending to excess loses its luster once the calendar flips to January and the bills start to arrive.
Here are 10 tips to help rein in your expenses this holiday season.
1. Create (and Stick to) a Budget
Setting up a spreadsheet may not put you in the holiday spirit, but it can reduce your financial stress. Taking time upfront to create a holiday budget will save you a mountain of work during the holidays, and keep you from having to pinch pennies once the fun is over.
Budget for the Unexpected
Maybe it’s a potluck at work, or maybe your partner gets roped into a Secret Santa gift exchange — no matter how carefully you plan, extra expenses will pop up during the holiday season. Build a cushion into your budget by overestimating costs and setting aside a little extra for surprises. That way, unplanned purchases won’t blow your budget.
Record Purchases When You Make Them
Making a budget is only half the battle, though. Equally important is tracking your money as you spend. If you wait until later to record expenses, you may forget to record some purchases or find you’ve gone over budget before realizing it. Use an app, a spreadsheet, or even a small notebook to write down everything as you go.
Pro tip: Build a cushion into your budget by overestimating costs and setting aside a little extra for surprises.
2. Plan Your Purchases
Impulse buys have become part and parcel of holiday shopping, accounting for one in three purchases during the giving season, according to Google. Unfortunately, buying without thinking can upend your budget in a single transaction.
Decide on a Menu
No one wants to forget the gravy or sit down to dessert and realize your kid’s favorite pie isn’t there. So, sit down with your family and decide what you’ll eat for special holiday meals. If you need to cut back on things, turn to generics or compromise in simple ways. For example,
- Opt for a turkey breast instead of a whole turkey
- Make food from scratch instead of buying pre-made
- Eliminate any overlap, like having sweet potatoes and sweet potato casserole
Planning what to purchase will keep you from wandering aimlessly through crowded department stores full of temptation.
Make a “Nice” List
Before heading to the mall, try to have an idea what you want to buy for each person on your gift list. Planning what to purchase — and knowing which retailer or service provider has the best price — will save you time and money. Plus, it will keep you from wandering aimlessly through crowded department stores full of temptation.
Set Spending Limits
When you made your holiday budget, you probably divided that budget by spending categories like food, travel, and gifts. One way to ensure you don’t overspend on gifts is to further divide your gift budget by the people you’re buying for. Not only will spending limits keep you on budget, but they’ll help you make sure everyone gets something nice.
3. Shop Smart
There are those who love holiday shopping, and there are those who want to buy the first thing they see and end their misery. If you’re the latter type, your rush to finish could be costing you. Here are some tricks for shopping smarter.
Comparison Shop
The internet has ushered in a golden age of comparison shopping. With a few clicks you can find prices at most big box retailers, and even many smaller local stores now have prices on their websites.
Price tracker websites can save you even more time by showing the top few deals for items you search in their database. You can even set alerts for price drops so you never miss the best deal.
Ask for your teacher, military, or senior discount to shave a few dollars off purchases.
Clip Coupons
From Halloween to New Year’s Eve, your physical and digital mailboxes will be filled with leaflets and emails from your favorite stores. Instead of using the paper for kindling (or hitting Delete All on your Inbox), comb through the sales flyers for coupons and scan promotional emails for discount codes.
You can also sign up for online sales and discount codes from your favorite retailers or comparison shopping websites. Don’t forget to redeem any in-store cash or rewards member discounts.
Leverage Membership Discounts
Even if you don’t normally ask for discounts you qualify for, the holidays are a time to do so. Ask for your teacher, military, or senior discount to shave a few dollars off purchases. Investigate your rewards credit card to see if you can save with specific retailers or on certain spending categories. You may be eligible for similar discounts through your credit union or employer.
4. Start Shopping Early
Putting up holiday trees before September ends can make a few eyes roll, but there is something to be said for shopping early. Here are some reasons why it pays not to procrastinate:
Avoid Panic Buys
Nothing’s worse than feeling pressured to buy something last minute rather than face the embarrassment of having run out of time. Similarly, when you see stock of that must-have item dwindling, you may be tempted to give in and pay too much. Starting earlier allows you time to compare prices and think through purchases.
Don’t Get Duped
Retailers sometimes mark up prices before slashing them for the holidays. Most people won’t notice and will feel they’re getting a deal. Meanwhile, retailers are still getting their money. Off-season prices for some items — particularly hobby items, toys, and games — can be actually be much cheaper outside of the holiday season when sales are much lower.
If you’re worried about missing Black Friday and Cyber Monday sales, don’t be. Highly-advertised “doorbuster” deals often aren’t as great as they’re made out to be.
If you’re worried about missing Black Friday and Cyber Monday sales, don’t be.
Spread Out Costs
Another advantage of starting your holiday shopping earlier is you can spread your costs over a few months. While that isn’t the secret to having a bigger budget, and it doesn’t give you license to spend more, it can make paying for the holidays easier.
5. Shop Local
Big box retailers grab most of the attention during shopping season, but shopping locally has great benefits including keeping money in your own community.
Local Artists, Crafters, and Makers
Odds are there are expert potters, candlers, weavers, and other artisans living nearby. There may also be local farmers selling preserves, candy, or honey your friends and family would love to try. Instead of waiting in endless lines, pick up some local goods for higher quality gifts and lower levels of stress.
Buy Used from Nearby
If your child has been begging for a guitar or a gaming system, your neighbor may be selling just what you need at a fraction of the retail price. Online marketplaces can connect you with local people open to selling or swapping used goods. You can also check out consignment and pawn shops to find gently-used or cool vintage items.
6. Give Alternative Gifts
A little creativity can not only save you money, but also delight and surprise your friends, neighbors, and coworkers. Here are some alternative gifts you can give this year:
Baked Goods
Giving baked goods might seem quaint, but it can be a very thoughtful gesture. Your friend, neighbor, or coworker might love a little sugar rush to get them through their holiday shopping. They can also come in handy as snacks for visiting family or surprise guests.
Crafts
A handmade ornament, a cozy knitted sweater, or a custom scented candle can make the holidays brighter by tapping into nostalgia. Plus, the thoughtfulness behind these gifts can feel much more personal than a generic knickknack. If crafting is your hobby anyway, you can hit two birds with one stone by gifting some of your creations.
Instead of another thing to fill up their house, give your loved one time together.
Time
According to a 2024 study in PLoS ONE, 42% of Americans are not as close to their friends as they’d like to be. This may be related to the fact that Americans are spending less time than ever with friends, which is why the gift of time may be the best gift you can offer to the people in your life.
Instead of another thing to fill up their house, give your loved one time together. Make time for the activities you enjoy together. Or try something new, maybe something your friend or family member has been wanting to try. The memories will last longer than any physical gift you could give.
7. Manage Expectations
Your family can still have a wonderful time together even if you have to cut back on your usual holiday spending this year. Setting expectations early can help avoid embarrassment or disappointment, so let friends and family know if you intend on switching up some of your usual traditions such as traveling or exchanging gifts.
Prioritize Meaning
Some people feel like they have to make each holiday bigger and better than the last. They delight in wowing family and friends, but this can come at a high cost. Thankfully, the people who care about you don’t need lavish things — they’re happy just to celebrate with you.
Focus on making holidays meaningful and fun. Prioritize traditions that bring your loved ones closer. Those are the things you’ll remember years from now anyway.
Let friends and family know if you intend on switching up some of your usual traditions.
Simplify Gift-Giving With Family
In some families, people purchase gifts for their extended family members during the holidays. If this is busting your holiday budget, talk to your family about alternative options. For instance, you can pick names from a hat with your family and have each person buy a gift for the person whose name they drew. Another option is to exchange Christmas cards or holiday photos instead.
Santa Doesn’t Have to Bring Everything
You want to give your children the world, and that’s completely understandable. But loving your child and giving them gifts are two different things. Just because your child’s holiday wish list is a mile long or has expensive items on it doesn’t mean you should break the bank buying everything.
Prioritize items you know your children will genuinely enjoy for a long time and that fit your budget. Skip those other toys they’ll play with for a minute and promptly forget.
The holidays can be a good time to talk with your children about needs vs. wants. If your child is working toward a savings goal, they may appreciate having fewer or less expensive gifts in exchange for a little cash. This may actually come out cheaper for you while also encouraging healthy money management habits.
8. Start a Holiday Fund
One of the best ways to manage your seasonal spending is to set up a holiday fund. Put a few extra dollars in your regular savings each week or open a separate account just for the holidays.
Once the shopping season arrives, only use money from your holiday fund to pay for gifts and other expenses. This approach to spending takes time and discipline, but you’ll appreciate not facing a mountain of debt in the new year.
9. Use a Budget All Year to Save More
One way to have a bigger budget for the holidays is to save money the rest of the year. Saving money is easier than you think.
Make a Personal Budget
In 6 simple steps, you can have an all-year budget to keep your spending in check. Personal budgets are highly customizable based on your personal goals, so you can add a byline to save a little extra from each paycheck to cover the holidays, birthdays, and family trips. When you know where your money is going, you can redirect it to the things you really want to spend on.
Cutting bad habits and redirecting those funds could go a long way toward covering holiday expenses.
Cut Unnecessary Expenses
Creating a budget makes you examine your spending habits. You’ll likely find you have some good spending habits, as well as some bad ones. Cutting bad habits and redirecting those funds could go a long way toward covering holiday — or other important — expenses.
Set a Family Savings Goal
Another way to build a bigger holiday budget is to set savings goals for the holidays. Get your family in on the plan by agreeing to eat out less, cut a subscription, or buy generic in exchange for fancier holiday plans. Keep track of your progress together and enjoy everyone’s excitement as the season gets closer.
10. Watch for Scams
December has become a popular (and profitable) time for scams. While it won’t keep you from busting your budget at Target or TJ Maxx, learning how to spot and avoid holiday scams can certainly have a positive impact on your bank account.
The simplest scam-dodging tips are often the most effective:
- Verify websites before providing financial or personal information. Make sure URLs are spelled correctly, and check for a lock icon in the search bar that shows the website is encrypted.
- Research companies advertising deals that seem too good to be true. Type the company’s name plus “scam” (for example, “GreatDeals.com scam”) to check for complaints about the company. Don’t rely on comments on their social media ads or company pages, since these might be positive comments they paid for.
- Ignore and delete emails or text messages from unknown senders. Don’t reply to messages that pretend to know you if you don’t recognize the email address or phone number because the sender could be phishing.
- Examine ATMs before inserting your card to protect yourself from skimmers that steal your card data.
- Review your credit card statements to check for fraudulent charges.
- Report suspected fraud to the Federal Trade Commission and take actions to protect yourself, such as freezing your credit.
Since most scammers never take vacations, you should remain vigilant about preventing credit card fraud and reducing the likelihood of identity theft throughout the year.
The Takeaway
For many people, November and December have evolved into a months-long shopping spree. There’s nothing necessarily wrong with this annual rite, unless you get so wrapped up in giving and receiving that you ignore your economic realities. With a pinch of planning, a cup of creativity, and a dash of discipline, you can embrace the spirit of the holidays in a financially responsible way.
It’s a recipe for happiness that should prove popular this season and beyond.
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