7 Holiday Budgeting Tips You Can’t Afford to Miss

The holiday season is a wonderful time of the year for many American families. It’s also an expensive time of year, and inflation and a tight economy are making the most festive people want to say, “Bah, humbug.”

American households are projected to spend an average of $1,236 on the holidays in 2022, which is a 44 percent increase over last year. Unless you’ve been saving all year for the holidays, that $1,236—or whatever you end up spending—might not be easy to come by.

Enjoying the holidays is difficult if you’re worried about money. Budgeting your holiday expenses can help you focus more on the season and the happiness it brings. Here are seven tips to get you started:


1. Stick to your holiday budgeting.

Perhaps the best approach to holiday spending is to set a budget and do your best to follow it. Sit down and determine how much you want to spend and how much you can afford before you begin shopping. Factor in the big items you want to purchase—they’ll likely take up a good percentage of your budget. From that, you’ll get a clearer picture of how much more you can comfortably spend.

With your holiday budgeting in hand, bring on the peppermint lattes and start shopping! A good plan shouldn’t take away from the holiday shopping experience, which many people understandably enjoy. Instead, it will keep you focused on the presents you want to give and make you think twice before going off budget. In other words, you’re really thinking about each present before you buy, which, besides making good financial sense, can make your gifts feel more meaningful.


2. Set a budget for each person.

Many parents can appreciate this challenge: ensuring you’re spending about the same amount of money on each child. But then, you make an impulse buy (more on this next) for one kid and feel like you need to buy something else for the second, then spend too much on that item and buy something for the first child to compensate—and before you know it, you’ve blown past your overall holiday budget.

The best way to overcome this challenge is to set a budget for each person you’re buying gifts—and then don’t go over. Gift-giving is about the thought and sentiment, not the price, so resist the urge to escalate beyond your budget. Perhaps ask family members to agree on a spending limit for holiday gifts. Or use a Secret Santa or a similar type of exchange to reduce the number of gifts each individual has to buy while ensuring fairness around the number of presents each person receives.



Download the Holiday Budgeting Checklist & Planner to help keep your holiday  expenses from snowballing.



3. Be a Grinch with impulse buys.

Stores are designed to tempt you to buy more than what you came in for—especially during the holidays, when retailers are trying to convince you that a sale item is not only a value but also something you just have to have. Online retailers such as Amazon aren’t any better and will bombard you with emails and sales notifications sent right to your smartphone.

If you’re following a holiday budget, impulse buys can wreck it quickly and leave you with big bills come January. Stick to your list of the presents you want to get, and if you do see an unexpected present that is too good to pass up, buy it in place of something else you were planning. 


4. Shop around, and look for deals.

Although you shouldn’t set your holiday budget expecting to find big discounts for the items on your list, deals and sales items can stretch your budget further. You’ll feel better knowing you aren’t spending as much, or you won’t feel guilty if you do get an impulse buy.

Of course, going from store to store hoping to save a few dollars puts you at risk of buying things you don’t need. Use the internet to research prices, and consider online retailers that might have better prices and/or offer free shipping. And if some item is continually coming up more expensive than you thought it would be, consider if your friend or family member would be just as happy with a different, more reasonably priced present.


5. Consider homemade gifts.

If your holiday budget turns out to be tighter than expected, consider alternative types of gifts that are easier on your budget and often more meaningful than something from the store or Amazon. 

The possibilities for homemade gifts are unlimited! Make a Christmas ornament or decoration, bake a tin of cookies, or even offer to take your friend out for dinner after the holidays. In many ways, these gifts are more appreciated and memorable than a store-bought present. Remember, for many people, the holiday experience with loved ones is what makes this time of year great—not necessarily the presents they receive.


6. Don’t forget about other holiday expenses.

Beyond gifts, the holidays bring other expenses that make budgeting a challenge. Are you playing host to family and friends for a holiday feast? Are you driving a few hours to see family on Dec. 25? Are you going out on New Year’s Eve and need to hire a sitter? All these extra expenses and others add up, making the holidays more expensive than you thought they might be.

With inflation, holiday expenses may feel even costlier. For example, most growers expect the average cost of a live Christmas tree to be 5-15 percent more expensive than last year. Budget for your miscellaneous expenses, give yourself some cushion because prices may be higher, and be prepared to trim (Christmas tree pun intended!) your plans as needed.


7. Plan for after the holidays.

After the holidays comes a bit of a financial hangover: getting your normal monthly expenses back on track. Even if you didn’t charge any of your holiday expenses, you might have dipped into savings or spent part of January’s budget paying for December’s presents. As a result, many families find themselves cash-strapped to start the new year.

When you budget for the holidays, also budget for at least the first couple of months after. You might decide you won’t go out to eat as much in January, or that you won’t spend money on entertainment but instead will enjoy video game nights with your kids playing the games they received as presents. Or you might decide to scale back your budget for gifts. Ultimately, your goal should be to enjoy the holidays and the new year without stressing about money.

If you want to get serious about your holiday budgeting, check out our Ultimate Holiday Budgeting Checklist & Planner. This resource includes everything you need to plan your finances for the holiday season, including a printable shopping list, wishlist, and budgeting template.


Download The Ultimate Holiday Budgeting Checklist & Planner

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