The holidays are meant to be a time of joy, but for many, they come with a hefty price tag. The pressure to buy the perfect gifts for loved ones can lead to overspending, leaving you feeling financially drained as the new year begins. In fact, a survey by MagnifyMoney revealed that the average American accumulated $1,325 in debt during the 2019 holiday season, with 78% of them unable to pay it off by January.
If you’re not in the habit of planning your holiday budget well in advance, don’t worry! There are plenty of strategies you can use to keep your spending in check this season without sacrificing the joy of giving. Here are nine tips to help you manage your holiday expenses.
1. Set a Realistic Budget and Stick to It
Start by determining a realistic amount you can afford to spend on gifts and celebrations. It’s essential to differentiate between what you’d like to spend and what you can actually afford. Ideally, you’ll create a budget that includes holiday expenses in your November and December plans. If you’ve never budgeted before, now is the perfect time to start. Once you have a total budget, break it down by person, and assign a set amount to each person you want to buy for. This helps keep you on track as you start your shopping.
2. Find Extra Room in Your Budget
If your budget is already tight, it’s time to get creative and see where you can cut back. Start with food expenses, which can vary depending on whether you’re hosting or attending meals. Consider reducing dining out and focusing on cooking at home with affordable ingredients. Grocery sales and couponing can also make a difference, so don’t overlook cash-back apps like Dosh or Ibotta to save even more.
Clothing and beauty costs can also add up during the holidays, especially with new outfits for parties or salon visits. This year, consider skipping the salon treatments and shopping for new clothes to reallocate that money toward gifts instead. For some, canceling a few subscription services like streaming apps or audiobook memberships can help free up additional cash for holiday shopping.
3. Pick Up a Flexible Side Hustle
If there’s simply no room left in your budget, consider finding ways to earn extra cash. While not all of us can afford to stop working to take on a second job, many side hustles are flexible and can help you make extra money quickly. Depending on your skills, websites like Upwork offer freelance work in writing, graphic design, and more. You could also sell unused items around your house on platforms like Facebook Marketplace or Craigslist. This will not only declutter your space but also help bring in some extra funds for your holiday spending.
4. Shop Smart and Look for Deals
Being strategic with your shopping is key to staying within budget. Before making any purchase, compare prices to ensure you’re getting the best deal. Look for coupon codes, cash-back offers, and discounts wherever possible. Tools like Capital One Shopping and Rakuten can help you find the best prices and automatically apply available discounts.
5. Consider Less Expensive Gifts
Not every gift needs to be extravagant or expensive. Instead of opting for pricey items, consider giving gifts that are thoughtful yet affordable. Homemade gifts, local artisanal products, or consumables like candles or baked goods are inexpensive options that still show you care. Your loved ones will appreciate the effort and thoughtfulness behind a gift that’s meaningful, even if it didn’t cost much.
6. Suggest Gift-Giving Alternatives
For large families or friend groups, the expense of buying multiple gifts can quickly add up. If you’re in this situation, consider suggesting alternatives to traditional gift-giving. Organizing a Secret Santa exchange or a White Elephant gift swap allows everyone to buy just one gift (within a budget limit), which reduces the financial burden and keeps the fun alive.
7. Don’t Waste Money on Excessive Wrapping
The focus of the holidays should be on the spirit of giving, not the wrapping paper. Avoid spending on expensive gift bags and wraps. Instead, consider repurposing materials you already have, like newspapers or old magazines, for a creative twist. Not only will this save you money, but it’s also a great way to reduce waste and be more environmentally friendly.
8. Use Credit Card Rewards
If you have a rewards credit card, the holiday season is a great time to cash in on your rewards. Make sure to use your rewards points for gift purchases or apply any cashback you’ve accumulated toward your holiday budget. Just remember to pay off your credit card bill in full to avoid interest charges.
9. Communicate Openly About Expectations
It might feel uncomfortable, but being honest with your family and friends about your budget limitations is completely acceptable. You don’t have to overspend to show you care. Let your loved ones know that you’re focusing on quality time together rather than lavish gifts. Many will appreciate the thoughtfulness behind your message, and it might even relieve some of their own financial pressures. For those with children, it’s perfectly fine to let extended family know that your gift-giving is focused on your immediate family this year.
Final Thoughts
Holiday spending doesn’t have to lead to financial stress. By being thoughtful about where your money goes, cutting back on non-essential items, and finding extra ways to earn, you can enjoy the season without breaking the bank. The most important thing is the thought behind the gift, not the price tag. Focus on creating memorable experiences and cherishing time with loved ones.
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