Author: A. Ajayi
The holiday season often derails budgets with extra spending on gifts, decor, food, travel, and entertainment. However, with practical planning and money management, you may be able to minimize the financial stress that often comes with this festive time of year.
Key takeaways
- Average holiday spending nationally runs close to $890–$1,000 per person. Still, your own number should come from your income, not the average.
- A holiday sinking fund, contributing a fixed amount each paycheck, spreads the cost out and keeps it off credit cards.
- Setting your budget early usually produces a more realistic number than waiting until the season is already underway.
- Buy-now-pay-later plans deserve the same scrutiny as a credit card; track every plan in one place.
- Match any financing tool to its actual purpose, and compare the full cost before committing.
Just how big is that extra spending, really? According to the
National Retail Federation's most recent consumer survey, shoppers expect to spend close to $890 per person this season on gifts, food, decorations, and other seasonal extras. There's no single "right" number, of course; base your budget on your income and obligations rather than a national average. But it's a useful sanity check, and a good reminder that a little planning now tends to pay off in January.
Setting and sticking to a budget.
This season of joy and celebration comes with gift-giving anticipation. However, amid the excitement, many worry about the implications. Worry less! By implementing some spending strategies and budgeting techniques, your holiday spending may remain within limits.
To keep your holiday expenses in check,
create a budget and stick to it. Consider your situation and other necessary expenditures. Once you know what is affordable, make a comprehensive list of everyone you plan to buy gifts for.
Also, calculate how much you can spend on each item based on your budget. This will help you stay on track with your goals while still spreading holiday cheer.
One method that works well is a "sinking fund": set aside a small, fixed amount from every paycheck into a separate account earmarked only for holiday costs. Hence, the money is there when the bills show up. The
Consumer Financial Protection Bureau's budgeting guide is a free, neutral place to start. It's also worth reviewing
five common budgeting mistakes before you settle on a number.
Shopping early helps you avoid crowds and get the best prices.
When it comes to holiday shopping, starting early is a way to cut costs. By seizing the opportunity of holiday sales, you could avoid long queues and secure the best prices on desired items. To assist you in your shopping endeavors and maximize savings, you may consider the following recommendations:
- Online comparison tools to shop around for the best prices on the items you want. Online retailers often offer better deals than in-store retailers, so this is a great way to save money.
- As soon as local retailers release their sales flyers, go through them. Use them to plan and find bargain deals on what you need.
- Avoid waiting until the last minute: You may miss the best offers if you wait. Also, the added pressure to buy right away may make you spend more.
- During the holidays, many retailers offer free shipping. To save money, take advantage of these offers.
Shop at discount stores.
You can find deals and save money on your holiday shopping in many places, from stores to online marketplaces. To make the most of your spending, keep an eye out for sales, clearance items, and coupons. Also, taking advantage of loyalty programs can earn you savings and points you can use on future purchases.
Another good way to save money during the holiday season is to consider shopping at thrift stores. Many thrift shops offer low prices on used items. This year, exploring bargain retailers could help cut costs. It just takes planning and research.
It's worth being just as careful about how you pay as where you shop. "Buy now, pay later" plans are everywhere at checkout now. While they can be useful when used deliberately, it's easy to lose track of what you owe once payments are split across several apps. The
Consumer Financial Protection Bureau recommends treating any buy-now-pay-later plan with the same scrutiny as a credit card, and checking your total balance across every plan before adding a new one.
Consider a holiday loan.
A Holiday Loan is a type of loan that can help you enjoy the holiday season with your loved ones. This can be especially helpful for covering the costs that often come with holiday festivities. Like any loan, it requires repayment over time. The specific terms of the loan, such as interest rates and repayment duration, vary depending on factors like your income and ability to repay.
Whatever option you rely on this year, match the payment method to the purpose and know the full cost before you commit. It also helps to understand
how an emergency fund and a loan serve different purposes, and to have a plan for
unexpected expenses that pop up mid-season despite your best planning.
Quick answers to common holiday budgeting questions
How far ahead should I start a holiday budget? Around eight to twelve weeks before your peak spending window, so the total splits across several paychecks instead of hitting all at once in December.
What's a realistic holiday budget? One built from your own income and bills, not a national average.
Many people start with roughly 1–2% of annual take-home pay as a rough ceiling and adjust from there.
What if I've already overspent? Total up what's committed before adding anything else, and see whether
a debt-focused budget can help you regain footing without new borrowing.
And lastly, it can be easy to overspend during the holiday shopping season. Impulse purchases are common during the holidays or when you want to express gratitude to someone. However, you can stay under budget with some preparation and self-control.