6 Ways Not To Go Broke This Holiday Shopping Season
Written by
Heather Altamirano
Edited by
Jenna Klaverweiden
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Holiday spending is up this year. According to the National Retail Federation, shoppers are estimated to shell out 2.5% to 3.5% more this year than in 2023, which equates to between $979.5 billion and $989 billion in holiday spending.
While it’s tempting to overspend on the mega sales this season, there are ways to shop without breaking your budget or running up the balances on high-interest credit cards you’ll be paying on for months.
Here are six ways to stay within budget this holiday shopping season.
Zero-Based Budgeting
A zero-based budget is a financial method that requires every expense to be justified — and could be a useful way not to go broke this holiday season.
“This budgeting approach allocates every dollar of income to specific categories, ensuring that your total income minus your expenses equals zero,” said Sherron Permashwar, CPA, of The Modern Savvy CPA. “In other words, every dollar has a designated purpose, such as bills, savings and holiday shopping.”
Take Advantage of Loyalty Programs
Now that the holidays are here, consider using the points you’ve been saving up to cover purchases and avoid racking up debt. “Loyalty programs have long been a tool to help millions of Americans stretch their monthly budgets, whether it be points from credit cards, gift cards, travel programs, etc.,” according to Mladen Vladic, general manager of loyalty services at FIS.
But not all loyalty programs are created equal. “To maximize a balance of value and convenience during holiday shopping, look to programs that allow you to redeem loyalty currency in real-time vs. requiring clunky email sign-ups, app downloads, etc.,” Vladic said. “We’re seeing a lot of adoption for these capabilities with both providers and customers and feel the trend is here to stay.”
Set Up Multiple Bank Accounts
It’s so easy to get caught up in all the sales and fall into the trap of excessive spending, but setting up multiple bank accounts for different needs, like holiday shopping, can help eliminate that financial problem, per Chad Olivier, CFP, CEO of the Olivier Group.
“Keeping these accounts at different institutions will reduce the temptation to overspend while providing a clear picture of where one’s money is going,” he explained. “This mirrors the advice we teach business owners in that maintaining separate accounts for taxes, working capital and investments will allow one to stay financially healthy and organized.”
Stack Rewards
According to Trae Bodge, retail, smart shopping and money-saving expert at TrueTrae, consumers could be missing out on saving money by not stacking rewards.
“Here’s the trick: Start with a rewards debit card that lets you choose a cash back category every month — like PayPal’s Debit Card, which gives 5% back and lets you tailor rewards to what you need, whether it’s gas, groceries or clothing on up to $1,000 in monthly purchases in that category,” she explained. “Then, layer it with in-app offers in your category for even more cash back, turning each swipe into ‘cash back on cash back.'”
Lean On Digital Tools
Planning early, creating a realistic budget and utilizing money-tracking apps can help relieve the financial stress of the holidays.
“Digital tools, like your banking app, can help you better understand your budget and savings by allowing you to create and track your budget; or, consider automating your savings using tools like Autosave,” according to Renée Campbell, director of youth and family banking at JPMorgan Chase.
Set Realistic Expectations
It’s okay to let people on your holiday list know you’re sticking to a certain budget and getting creative with gifts to save money.
“If you don’t have expectations set, people can assume bigger is better or more is better, but that’s not always the case — especially if you’ve experienced unexpected expenses or a job loss this year,” said Matt Watson, CEO and founder of Origin Financial. “If that’s the case, explain your situation to your loved ones and set clear expectations of what you plan to give and what you wish to receive this year.”
The holidays don’t have to be a financial burden. Smart planning and money-saving strategies can help keep you on track financially this season.
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