It’s that time of the year – family cheer, wreaths galore, celebrations at work, and no shortage of gifts. That last part, though, can make sticking to a budget during the holidays pretty tough. Highly sought-after presents can be expensive, so buying gifts for all your loved ones can quickly start to become a financial burden. The good news is that you can make a sound end-of-year financial plan with these budgeting tips for the holidays.
Table of contents
- 12 Budgeting Tips for the Holidays
- 1. Make Your Own Gifts
- 2. Save Up for Expensive Gifts
- 3. Avoid Shopping Sprees
- 4. Figure Out for Whom You’ll Buy Gifts
- 5. Further Limit Your Impulse Shopping
- 6. Go Bargain Shopping
- 7. Holiday Shop on Black Friday or Cyber Monday
- 8. Look at Last Year’s Holiday Receipts
- 9. Set Holiday Spending Limits
- 10. Know What You Can Afford
- 11. Track Your Purchases
- 12. Use Solely Cash
- More Ways To Save During The Holidays
12 Budgeting Tips for the Holidays
In the below list of spending tips, you’ll find advice you can use shortly before the holiday season or as early as January. No matter how urgently you need to save money and stick to a reasonable budget for the season, something in this list will help you out. Plus, all these tips are pretty easy to follow.
1. Make Your Own Gifts
Think about when you make your own meals instead of dining out. In the latter case, maybe you’ve realized you could make the same thing yourself for a fraction of the cost. You can also apply this logic to holiday shopping to save money.
For example, let’s say someone in your family would love some new wall art for their bedroom this holiday season. You’ll probably see a wide range of prices online, and the best-looking prints will probably be expensive. But what if you bought a frame and printed a photo at a nearby big-box store instead? You’d probably pay much less while achieving the same effect for your loved one. It’s more work, but it’ll cost way less than you initially planned to spend. Plus, you’ll give a gift made with love and care — and that’s priceless!
2. Save Up for Expensive Gifts
Maybe someone in your life has been desperately seeking a new video game console, designer jacket, or something else expensive. Once you realize this, you can put together a plan to start saving toward this gift.
To do so, you should first figure out when you’d need to purchase the gift. Then, you should determine the number of paychecks you’ll receive between now and that date. Divide the gift’s price by this number, then set aside the result with every paycheck you receive. This way, you should have enough money come buying time to make the purchase.
Of course, this holiday budgeting tip makes more sense if you begin saving earlier in the year rather than later. So if it’s January and you’re already looking at budgeting tips for the holiday, this one could be top of your list. That said, it can still be useful in November or even December if last-minute shopping is more your thing.
3. Avoid Shopping Sprees
When was the last time you were in a store and you walked out with way more than you were hoping to buy? You might retrospectively look upon these sorts of shopping sprees as impulsive, though they might not be entirely your fault. You might instead have experienced something known as the “shopping momentum effect.” This effect results from how a store’s environment may make buying increasingly more products at once feel more rewarding.
Many stores use lighting, display arrangement, music, and in-store discounts to achieve this effect. If you recognize these features, you can step back and think about whether something you’re seeing is truly something you should buy. This way, you don’t unnecessarily spend money, meaning you’ll more likely stick to your holiday budget.
4. Figure Out for Whom You’ll Buy Gifts
When you know exactly for whom you need to buy exactly which gifts, you’ll have a strong foundation from which to build a budget. In that case, you can simply write down the price of each gift and any additional materials associated with it, such as wrapping paper. You can then add the total cost of each gift and set the sum as your budget limit. You’ll also get a rigid shopping list in the process so you can avoid costly, out-of-budget purchases.
5. Further Limit Your Impulse Shopping
Recognizing the shopping momentum effect and making a list of people and gifts are both great steps for limiting your impulse shopping. You can also take additional steps if you’re worried about your susceptibility to spontaneous purchases. For example, you could ditch in-person shopping for online purchases. Or you could stick to in-person shopping but bring solely cash and no credit cards. This way, you have an inflexible spending ceiling that matches your budget.
6. Go Bargain Shopping
The work that can go into finding bargains can be well worth the money saved. Your path should begin with knowing which gifts you plan to buy. You’ll then need to figure out whether outlet stores or secondhand shops carry these items. Once you do, you can also scour the internet for coupons. You could even turn to an online gift exchange platform if you have things to give in exchange for the gifts you need. Any platform through which you can get gifts for cheap or free can help you stick to your holiday budget.
7. Holiday Shop on Black Friday or Cyber Monday
In the U.S., on the day after Thanksgiving, known as Black Friday, retailers discount their prices more heavily than at any other time. As such, waiting until Black Friday to buy holiday gifts for your loved ones is a great way to spend less and stick to your holiday budget.
That said, Black Friday shopping can require immense patience and resisting temptation, as lines are long, items go quickly, and the sales aren’t always rock bottom deals. For a more relaxed experience, you can shop online the Monday afterward instead. This day is known as Cyber Monday and can be a great occasion for you to comparison-shop among several retail websites. The best price for your gift should be somewhere out there.
8. Look at Last Year’s Holiday Receipts
What you spent last year during the holiday season can inform what you spend this year. If your receipts show that you bought $500 in gifts for 10 people last year, you can start with a $500 budget for this year. You can then add to that budget for each new person on your list or each gift that’s significantly more expensive than last year’s presents. Be sure to factor in sales tax to avoid coming up with a budget that’s accidentally too small.
If you don’t have receipts from last year, you can look at your credit card or debit card statements from last holiday season. Find the sum of all the gift costs you see there to determine your budget. While you’re at it, make sure to save all your receipts this winter so you can use this budgeting tip for the holidays next year.
9. Set Holiday Spending Limits
This tip goes hand in hand with many of the above tips, but it bears repeating. When you think of your budget as a spending limit instead of a flexible ceiling, you’re much likelier to spend within your abilities.
This notion is even truer when you set spending limits for several categories of holiday gifts. You could put aside $150 for video games, $250 for clothes, $50 for kids’ toys, and $50 for chocolates and other foods. If these caps reflect the prices you expect to see in stores, you should stay within budget just fine.
10. Know What You Can Afford
It’s one thing if someone wants you to get them an expensive new gift. It’s another thing to actually be able to afford it. Sure, you can save money toward it, but what if spending that money would significantly hamper your ability to pay important bills? In that case, you should adjust your budget to reflect that you can’t reasonably afford this high-end gift. Plus, if you explain your situation to the person in question, you’ll probably be met with empathy. From there, you can work with this person to determine a different holiday gift.
11. Track Your Purchases
Let’s say you’ve set a budget based on gifts and accessories such as holiday cards. You’re probably assuming that all your purchases will cost exactly as much as expected, with no unwelcome surprises. However, the world doesn’t quite work like that. You just never know when you might encounter a gift that’s $50 more than you planned for. That’s why you should track your purchases. This way, you can know if you’ve gone off-budget and by how much, and then, you can plan accordingly.
12. Use Solely Cash
As hinted at earlier, cash purchases can limit your impulse buying in ways impossible with credit cards. When you go to the store with only $100 in hand to buy two $45 gifts, you probably can’t add anything else to your list.
You should always bring a bit more cash than the total of your purchases to cover sales tax. At the same time, you shouldn’t bring so much cash that you give yourself room to impulse spend. A little cushion for the holidays is great, but a sizable cushion is how you accidentally go off-budget.
More Ways To Save During The Holidays
The above budgeting tips for the holidays should be feasible no matter how much money you have or how you prefer to make purchases. They’ll likely help you curb your spending to at least some extent whether you’re more of a credit card or cash person. And if you are a credit card person, there might be a card you don’t yet have that can earn you more budget-boosting cashback on your holiday purchases. Visit our credit cards page to explore some options.