During the holiday season, there are shopping temptations around every corner, so it’s easy to get enticed to overspend on your family and kids — and even on yourself. And while it’s OK to splurge here and there, you don’t want to blow your holiday budget and wind up starting the New Year in debt.
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Set Your Holiday Budget
“The first step to making sure you don’t overspend is to decide how much you have to spend,” said Bobbi Rebell, CFP, personal finance expert at Tally. “Sit down with your budget and look at how much you can realistically spare each paycheck between now and the holidays when you factor in gifts and the costs associated with holiday gatherings and travel.”
If the amount you can afford to spend is looking a little low, start cutting back on spending now so you can boost your holiday budget.
“Cut back on your spending in the months/weeks leading up to your holiday shopping and set aside those extra funds to pay for your gifts without increasing your credit card balance,” said Amy Richardson, CFP with Schwab Intelligent Portfolios Premium. “Having a budget lets you enjoy the holiday season of giving and time with family and friends to the fullest.”
Create a Holiday Shopping List as a Family
Barbara Huson, an expert on women and wealth, said that when you make your holiday shopping list you should “make it a family affair.”
“Sit down with spouse and kids, [and] together decide who you are going to give gifts to,” she said. “Use the holidays to educate your family about budgeting, setting boundaries, the danger of debt and core values.”
And just like Santa Claus, once you make your list, you should check it twice.
“Trim your list before you trim the tree,” Huson said. “Decide who you can cut altogether or make gifts for, such as baked goods or a coupon for a night of babysitting.”
Once you have your final list, determine how much money you will allocate per person based on the budget you have set.
“The total amount of people you’re buying for shouldn’t exceed the amount you’ve allocated,” Rebell said.
Avoid Spending Money on Shipping Costs
“Shipping costs are outrageous this holiday season,” Rebell said. “My advice: consider gifts that don’t require shipping, like audiobook subscriptions, gift certificates to restaurants, annual memberships to local zoos or museums, meal subscription services or a national parks annual pass.”
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Shop Online To Avoid Temptations in Stores
You’ll be less likely to put things in your cart that you don’t need when it’s a digital one.
“Consider shopping exclusively online,” said Allison Baggerly, founder of Inspired Budget. “While it’s fun to go to your favorite store and see everything there is to offer, that’s when temptation tends to hit. All it takes is one unplanned item in your cart to throw your entire holiday budget off track. You can combat this tendency by only shopping online so you aren’t faced with the same temptations in store.”
Keep a Separate Checking Account for Holiday Expenses
Instead of charging everything to a credit card, consider opening a checking account for your holiday expenses and paying for these costs with debit or cash.
“Simply transfer the money you’ve budgeted for the holidays into this new account,” Baggerly said. “When you commit to only using this account for holiday spending, it’s easy to see how much you’ve spent as well as how much money you have left to spend. Be sure to opt out of any overdraft options or options to pull money from savings. This out-of-the-box method will keep you on budget this year!”
Bola Sokunbi, founder and CEO of Clever Girl Finance, also recommends having a dedicated account for holiday spending.
“One way to resist the temptation of overspending during the holidays is to set up a dedicated account for your holiday spending, e.g. for gifts, travel, events, etc.,” she said. “This way you can plan out exactly how much you can afford to spend without impacting your other goals, and you can track your holiday spending against this account to stay on track.”
Give this account a name so you know exactly what it’s for.
“I like to set up dedicated titled accounts for my various spending goals,” said personal finance expert Marcus Garrett. “This is surprisingly easy to do. In fact, most banks already let you nickname the accounts you already have access to by category directly online or their app. Seeing an account listed as ‘vacation,’ ‘holidays’ or, unfortunately, ‘taxes,’ helps me stay disciplined all year round and even through the spending temptations of the holiday season.”
Give Savings Bonds as Gifts
“One holiday shopping tip that I’m using this year is to give U.S. savings bonds as gifts,” said Susan Mayo, senior managing director for Wells Fargo’s Wealth & Investment Management group. “For example, let’s say that I give all three of my grandchildren a $100 bond, costing me $50 each. The benefits of doing so are that the savings bonds can be purchased online — no shipping required — the amount is easy to track and what’s more, my investment is doubled at maturity!”
“Admittedly, I also like that this gift provides the opportunity to open up a dialogue with young people about money and steps they can take to become more financially savvy,” she added.
Find Out: 29 Ways To Save On Holiday Gifts
Curb Your Social Media Use
Even if you avoid shopping in stores, you may be tempted to overspend by what you see on social media — so scroll with caution.
“We suggest avoiding or reducing time on social media,” said Mike Butler, VP of growth at
Asset Direct of Canada Inc. “During this time of year, you can go down a rabbit hole comparing products you were advertised or trips friends are taking, and can easily escalate your budget by shopping ‘deals’ on things you don’t need. Take time away from looking at what others are doing or spending money on, and focus instead on your own loved ones and personal connections.”
Give Experiences Rather Than Physical Gifts
“One of the best ways to avoid overspending is to focus on giving experiences and building memories,” said financial expert Winne Sun. “If you have kids, ask them what their most memorable Santa or birthday gift is. When I asked my three little ones, they had trouble coming up with an answer or even remembering most of the gifts received. But ask them what their favorite park, restaurant or vacation is and they will jump to answer.”
“Let that guide you this holiday,” Sun continued. “Find meaningful ways to show those that you appreciate and love in an experience-driven way. This could be a meal together, a virtual sushi-making party, a surprise visit, a charity donation or volunteer hours in the person’s name, or other creative and genuine experience. This will quickly keep you from searching for Black Friday deals and let you focus on the people who mean most to you — good for the heart and good for the wallet.”
Remember That It’s the Thought That Counts
The old adage is true, so don’t feel pressured to spend a lot on gifts. Instead, focus on giving meaningful gifts.
“Gifts that have more thought put into them have more of an impact than more expensive ones,” said Jason Steele, a credit card and travel rewards expert. “If you can purchase something that has a particular meaning to the recipient, it will mean more than an expensive, but generic gift.”
Save While You Spend
Put less of a strain on your budget by using a cash-back credit card to make purchases — this way you’ll get money back on every gift you buy. Or, consider using a debit card that rounds up purchases to the next dollar and transfers that amount to your savings.
“Holiday shopping may very well be your biggest spending spree of the year — and there are a lot of ways to get the most out of it,” said Brian Hamilton, CEO of the digital bank One. “Use it an opportunity to kickstart your savings going into 2022.”
Plan Ahead To Get the Best Deals
Do some research to find out which retailers have the best deals on the items you want.
“Time deals and steals,” said Lindsey Bell, chief markets and money strategist at Ally Bank. “If your list includes buying a name-brand bag and the latest gaming console, stretch your dollars by thinking beyond Black Friday and Cyber Monday and watch for sales.”
Don’t Make Impulsive Purchases
Before buying a high-ticket item, sleep on it to ensure it’s something you really want to spend your holiday money on.
“Wait 24 hours before making a purchase over $100,” said Rachel Cruze, author, financial expert and host of “The Rachel Cruze Show.” “Give your brain the dopamine fix it craves by ‘adding to your cart’ when shopping online but not actually buying. These are practical actions that will give you the freedom you need to focus on what matters most this season — time with family.”
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Gabrielle Olya contributed to the reporting for this article.