A Black man holds a small Christmas tree walking in a snowy city alongside a kid holding two gift boxes while smiling at each other, indicating they have their holiday budgeting in order.
A Black man holds a small Christmas tree walking in a snowy city alongside a kid holding two gift boxes while smiling at each other, indicating they have their holiday budgeting in order.

Holiday Budgeting: A 3-Step Guide to Control Your Holiday Spending

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Save more, spend smarter, and make your money go further

The end of the year is here, the time where our collective attention usually shifts to the holidays. Whether it’s making travel accommodations, planning for parties, or shopping for gifts, ‘tis the season to keep holiday budgeting top of mind.

Holiday budgeting is planning and setting limits for your budget during the holiday season. It’s a means to help you avoid overspending on gifts and holiday festivities and, in turn, take control of your finances at the end of the year.

Bearing in mind that consumers will spend an average of $998 on holiday gifts alone in 2021, planning a budget early can help you control your holiday spending. This guide will teach you how to control your spending habits in three steps and highlight 20 holiday budgeting hacks you should know.

An illustration of a gift with a holiday budgeting tag explains the three steps to start budgeting for the holidays.

Step 1: Create a Holiday Budgeting Plan

When it comes to the end of the year, we know things can get busy, especially when planning a budget. The first step to staying on top of your holiday finance goals is by creating a budgeting plan.

1. Set a Holiday Spending Limit

Setting a spending limit is crucial to ensure you don’t overspend. Go through your budget, bank statements, and credit card accounts to see how much you can add to your holiday budget. Be sure not to take money from your emergency fund or from the budget for necessary expenses, such as rent and utilities.

2. Determine Your Holiday Expenses

Determine your holiday expenses by taking into account everything you’ll be spending during the holiday season. Plan for expenses such as:

  • Gifts for family and friends
  • Wrapping supplies
  • Party decorations
  • Meal ingredients
  • Clothing for events
  • Games and activities
  • Travel and accommodation
  • Charitable donations

3. Review Past Holiday Expenses

To help you better understand what your holiday budgeting plan should look like, go through last year’s credit card and bank statements to determine how much you normally spend during the holidays. This is also a good time to evaluate what areas you can cut down on.

4. Identify Your Priorities

If your holiday spending list is out of your budget, don’t panic. Take an extra look at your list and evaluate whether each expense is necessary. Set spending priorities and cut from the list anything that’s not essential or that can be allocated to someone else.

5. Assign Money to Categories

One way to make sure you’re not overspending on gifts is to create expense categories and assign your holiday money to each of them. Making sure each category has a budget limit will help you get everything that’s needed for your holiday events without breaking the bank.

Step 2: Stick To Your Holiday Budget

After creating a holiday budget, it’s time to stick to it. Here are some holiday tips to help you spend less this season:

6. Make a Holiday Shopping List

Make a shopping list of every item you need to buy for the holidays and add the budget for each of them. Keep it handy when going shopping to make sure you’re not buying unnecessary items or overspending on gifts. You can also use a grocery budget calculator when planning your holiday meals.

7. Track Your Spending

Keep track of your spending on a daily basis and save the receipts in case you have to return items. Record your holiday spending on a notepad, spreadsheet, or budgeting app and make sure it’s easily accessible.

8. Manage Impulse Buys

Sticking to your holiday shopping list can help you manage impulse buys. Take a moment to research gifts before buying and shop around for cheaper or better options. Avoid shopping sprees by shopping online and sorting your search by your budget limit.

9. Price Check

Research gifts ahead of time and price check them between different stores and locations. You can even check prices at certain stores on your phone. Many stores will also price match items if they are listed at a lower price somewhere else.

10. Find Ways to Earn Extra Money

When the holiday season approaches, many stores will hire seasonal employees, and this can be a good way to earn extra holiday money. You can also look at selling things you don’t need anymore or start a side hustle at home.

11. Create a Holiday Savings Account

Planning ahead of time gives you the opportunity to build some holiday savings. Create a holiday savings account and add funds to it each month. Having a savings account specifically for seasonal shopping can also help you keep track of your spending by strictly taking the money from that account.

12. Consider Shipping

When buying gifts and clothing online, take into consideration the shipping times and fees. To avoid spending more on shipping, choose store pickup or look for websites that offer free shipping.

An illustration inspired by an advent calendar contains 12 holiday budgeting tips and whether it is a spending tip, budgeting tip, or saving tip.

Step 3: Remember These Holiday Budgeting Hacks

There are many ways to practice good spending habits during the holiday season. Here are some holiday budgeting hacks to save you more money:

13. Buy Ahead of Time

Planning is key to budgeting for the holidays. Since prices tend to go up for the holidays, take some time to look for gifts ahead of time, and buy them at a discount in earlier months. This is also a good time to check price trends and make sure you’re buying at the lowest price.

14. Look for Discounts

When you’re buying gifts, try to take advantage of every possible way to save money. You can install browser extensions to help you find the best deals, look for online coupons and store pamphlets, and even join mailing lists for retailers that offer sign-up discounts.

15. Shop Older Versions

Many of us might be guilty of wanting the latest gadget models, but the truth is, older versions might be the best bang for your buck. Compare models ahead of time and buy an older version if possible, especially when gifting tech gadgets.

16. Create DIY Gifts

You’re likely making the best decision for yourself and your family by focusing more on thoughtful gift-giving and less on extravagant, showy presents. Stick to your holiday budgeting plan by investing your time in creating DIY gifts for your loved ones.

17. Suggest a Potluck

Family and friend reunions can be a great way to catch up and eat festive meals. But planning a full-course dinner is not only a lot of work — it can also be expensive. Suggest a potluck instead, and plan for each person to bring a dish of their choice.

18. Propose a Secret Gift Exchange

Buying gifts for everyone is not only hard to plan out, but can come at a cost. Propose a secret gift exchange with a set limit instead. This can be a fun holiday activity that also keeps your holiday budget within scope.

19. Repurpose Decorations

It might be tempting to buy new decorations each year, but before doing so, take a look at what you already have in storage. If you like to give your house a new look each year, consider repurposing your decorations or placing them somewhere different.

20. Gift Experiences

Your time can be the greatest gift you can give to a loved one. Instead of spending money on presents, take them out on a trip to the beach or to see holiday lights and take lots of pictures and videos. Or write up a card offering a free movie night with a home-cooked meal.

Holidays can still be fun on a budget. After all, what really matters is spending time with loved ones and recharging your batteries for the new year. Creating a holiday budgeting plan can help you stay in control of your finances and start the year with extra money in your stocking. Have yourself a merry budgeting season!

Save more, spend smarter, and make your money go further

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