10 Smart Spending Strategies for the Holidays

Woman spent all her money during Christmas shopping.
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Even with the best of intentions, holiday spending can easily get out of control — displays abound with shiny new items that catch your eye as your browse; holiday décor and seasonal items are hard to pass up; and, of course, the expectations of holiday gift-giving may drive purchasing beyond your means, and most definitely beyond what you usually spend in any given month. But you don’t have to experience financial hardship with your holiday spending — experts weigh in on ways to manage your holiday spending for a joyful and affordable season.

Make a List

Just like Santa, you should be making a list and checking it twice, or at least before you go out shopping, said Lindsey Bell, chief markets and money strategist at Ally.

“The best way to curb impulse buying and last-minute spending is to create a gift-giving list ahead of time and earmark a budget amount for each person. Since no plan is perfect, set aside some cash in a buffer fund for the perfect gift that falls just outside your budget. Building in that flexibility keeps you accountable but also eliminates stress.”

Handmake Your Gifts

Don’t underestimate the meaningful gesture of a homemade gift, whether that be baked goods or an act of service such as teaching a skill or shoveling someone’s driveway, said Swati Chalamuri, founder of hearmefolks.com. Handmade gifts can be some of the most treasured items during the holidays.

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Give Experiences

Material objects may not be the most coveted gifts on everyone’s wish list, said Tanya Peterson, vice president of brand at Achieve. “Give experiences. Most people look forward to time spent with family and friends more than large piles of presents. Consider giving gifts of time or experience that may have more long-lasting value than the joy of opening a box.” Such examples could include online or in-person classes; subscription boxes; sports, music or art lessons and so on. You could even make a contribution to a 529 college savings account for a young relative. “For all of these, you can definitively control the level of spending.”

Avoid Credit

This is a good time of year to keep your credit card in your wallet and only purchase what you can afford with cash, said Guadalupe Sanchez, founder of Budgeting in Blue. “There’s something about using a credit that makes you think you didn’t buy it. It’s not until you pay your statement that you realize that you spent more than you intended. I recommend using your debit card online and using cash in-store. Using either will help you understand, in real-time, how much you’ve spent and how much you have left.”

Create an Itemized Holiday Budget

Setting a holiday budget is a great idea for limiting spending, said Matthew Paxton, founder of Hypernia. “From there you create itemized expenses according to the budget. Allotting according to the budget should be the general premise and do not spend on something that is outside of the bounds of your budget.”

Additionally, you can try to come up with cheaper alternatives to expensive gifts that will bring joy. “For example, instead of going to a fancy restaurant perhaps you could opt to make a grand and intimate dinner with loved ones. This way, you didn’t just cut the costs but also were able to achieve quality time with loved ones.”

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Buy Used

Don’t get hung up on buying the shiniest, most expensive new gifts. There are tons of great products available used or second hand, from thrifted clothing to electronics, said Andrew Lokenauth, a CPA and finance professional. “There are many options such as thrift stores like Goodwill, Facebook Marketplace, eBay and Craigslist.”

Do a White Elephant Gift Exchange or Secret Santa

Instead of buying new, exchange existing gifts with friends and family, or a Secret Santa operation, where you only buy for one person, said consumer analyst Julie Ramhold with DealNews.com. “That way you only have to worry about buying one gift, and it’s easier to put a spending cap on as well. Plus, depending on what you set the limit at, you may even create a fun challenge for your guests to find a great gift under that cap.”

Shop Where There’s a Price-Match Guarantee

Shop at stores with price-match guarantees, Lokenauth encouraged. “This way, you are guaranteed to automatically receive a refund or the difference if the price drops. Many big retailers, such as Best Buy, Target and Walmart, have price-match guarantees to adjust the price if you find a better deal elsewhere.”

Create a ‘Sinking Fund’

The holidays may feel like they sneak up on you, but the truth is, we know they’re coming at the same time every year, so consider creating a “sinking fund,” where you save money each month toward the holiday, said Tamara Hull, certified financial educator and blogger at Autism and ADHD Connection. “We all know Christmas, Hanukkah and other holidays are going to come each year, so it’s a predictable expense you can plan for in your budget.”

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Avoid Buy Now, Pay Later

Though “buy now, pay later” options have become more widespread, be careful when using them, said Sue Zhou, a former personal finance expert at Digit. “Be wary of companies like Affirm or Quadpay when holiday shopping – only use these short-term credit solutions if you know you will be able to pay off the payments on time, otherwise you’ll be hit with unexpected fees! If you do choose to go this route, set up automatic payments or set calendar reminders for yourself to ensure you make every payment on time.”

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