Think you can't get through the holidays without spending a fortune? It can be easy to go overboard on holiday shopping, but with a little bit of planning and budgeting, it is possible to celebrate without spending all of your cash or maxing out your credit cards. Use these eight practical tips to ensure you stay on budget for the new year, rather than getting wrapped up in holiday spending.

Key Takeaways

  • Sticking to a budget is a good way to keep yourself out of debt during any time of year. 

  • Controlling your holiday spending is an essential aspect of a healthy financial life.
  • Alternative gifts, such as volunteering or handmade goods, are ways to save money during the holiday season.

1. Set Holiday Spending Limits

Give your credit card and your mind a holiday by limiting what you buy to what can safely come out of your bank account. Use this opportunity to create or get your budget into fighting shape, and use it to decide how much money you can afford to spend.

Holiday budgeting is a way to set limits on your purchases and still enjoy the season. It can help to set up a budget and limits that you will stick to—without caving in and racking up the credit.

The money you can reasonably spend on gifts is money that isn't going to bills. That said, if you want to have a little more to spend, this doesn't have to be just the money left over at the end of the month. You can also use the money that you would normally spend elsewhere, such as on your morning latte. As long as you are using cash (not cash advances from credit cards) without spending your rent money, you are doing great.

Remember to be realistic about what you are willing to sacrifice. You may spend your monthly clothing budget on holiday gifts, then come up empty when you need new snow boots.

2. Make Your Own 'Naughty or Nice' List

Santa has to buy presents for the whole world, but you don't. If your shopping list includes more than five people outside of your immediate family, cut down on the number of people on your present list.

Then, bake some cookies to give to all the people you snipped from your original gift list. This will ensure you spread the holiday cheer and keep you from looking like Scrooge.

3. Be Realistic About Your Budget

Your older brother paid off his student loans five years ago, and he always gets you the fanciest presents. However, if you are in a different place in your financial life, you shouldn't follow suit.

If you have any doubts as to whether those on your list will appreciate the less expensive presents you buy them, think back to what your friends and family gave to you when their budgets were tighter. There's no doubt that you'll both be better friends in the new year if you're not creating debt loads for each other this year.


The average amount Americans planned to spend on gifts, food, and decorations in 2020 holiday season, according to the National Retail Federation (NRF).

4. Become a Coupon and Coupon Code Collector

Sales aren't the only way to get great deals on the gifts you want for your friends or family. Before you shop online, perform a quick web search for coupon codes for your favorite online stores.

Before you shop in local stores, comb through the coupons you received in your mailbox. While you search through the flyers, make sure to comparison shop for the item you're interested in. Savings can happen just by keeping your eyes peeled for deals.

5. Give the Gift of Your Time

Mom and dad (or other far-away family and friends) might love nothing more than a visit from you. Another idea? Writing up a "free night of babysitting" card for your family members with young children, or "good for a home-cooked meal" certificate for your widowed aunt that can be used when the time is right.

6. Build Better Spending Habits

Get over the how-am-I-going-to-pay-off-my-credit-cards-next-month anxiety by giving yourself the gift of developing new-and-improved spending habits.

For example, for every dollar you spend on gifts, you could find a way to remove that dollar from your regular spending. Around the holidays, you can use those savings to buy presents, but next month—and the rest of the year—what you save can go into your savings account.

7. Provide Personalized Gifts

A small, thoughtful gift is worth more than an expensive gift that someone may never use. Avoid impulses to shop at trendy stores and start the holiday by taking a moment to think about what those on your list could really use.

For example, if your sister loves to bake but can't get the hang of homemade pie crusts, you could buy her a simple pastry-making tool for less than $10 and include a copy of a fool-proof recipe.

8. Organize Group Volunteering vs. Holiday Parties

Your friends probably struggle with overspending as much as you do over the holidays. Give them the relief of forgoing buying gifts for you by organizing a group volunteer day instead. It's possible to volunteer virtually, too. You'll come out of the day feeling proud of your efforts rather than suffering from buyer's remorse, and anyone can benefit from volunteering.

Non-profit VolunteerMatch has a massive online database that you can search to find volunteering opportunities (in-person and virtual) for a wide variety of causes and organizations throughout the United States.


The Bottom Line

Don't let your debt become the Grinch that robs the fun from your holiday season. Base your gift buying on sentiment rather than dollar value and avoid giving yourself a year-round debt headache. If you can follow these tips, when your holiday bank and credit card statements arrive in the New Year, you'll find yourself singing "Joy to the World" all over again.