6 Ways to Budget for the Holiday Season

Avoid going into credit card debt after the holidays with these tips

Don't let the holiday spending stress you out. Here are 6 ways to stick to a holiday budget and why it can help. Steve Debenport / Getty Images

The holidays are here, and for many, it's a season of spending.

According to a recent poll by Gallup, Americans are planning to spend an average of $752 on gifts this year. Gallup notes that on the high-end, 30 percent of people expect to spend $1,000 or more, while 23 percent will spend less than $250. 9 percent don't even plan on buying gifts. 

Where do you fall in this spectrum?

If you're worried about the pressure to spend on the most amazing gifts this holiday season while staying within your budget, the following tips will help you deal.

You don't need to spend hundreds (or thousands) to have a happy holiday. 

Set Your Budget Before Anything

The first step to sticking to a budget is to set one. If you have no idea what your holiday spending will look like, or what you can afford to spend, you need to figure that out

Ideally, you should be saving up throughout the year (for example, stashing away $50 each month into a savings fund), but it's never too late to figure something out

Take a look at your spending patterns and see what you can save for gifts. Can you temporarily cut back on anything in the meantime to compensate for the increased spending on presents? Can you work more hours to earn more money? 

Come up with a solid number for yourself so you have a hard limit and can work within those limits to make the holidays less stressful. The worst thing you can do is end up in debt after all is said and done. 

1. Institute a Spending Limit

One of the easiest ways to make sure you stay on budget is to limit how much you spend on gifts.


You can set these limits in a variety of ways. For example, maybe you decide to only spend $100 per family, or $50 per couple, or $25 per individual. 

Maybe you and your partner agree to only spend a maximum of $200 on each other. If you have kids, perhaps you decide to only spend $100 on them. 

The numbers don't matter.

You might think it's trivial to say you can only spend $10 on all of your nieces and nephews, but if you have 10 to buy for, that adds up! 

2. Make a List and Check It Twice

Once you have your spending limits in place, it helps to create a list of gifts and what they cost so you can make sure you're sticking to those limits. 

It can look something like this:

Partner $100:

  • Shoes: $40
  • Coffee mug: $10
  • Sports jersey: $50

Mom $50:

  • Candles: $20
  • Slippers: $20
  • Nail polish: $10

Dad $50:

  • Trilogy book series: $25
  • Coat: $25

Sister $25:

  • T-shirt: $15
  • Bracelet: $10

The point is to be specific about what they want (or what you think they'd like) and how much it will cost. This way, if you see an awesome pair of shoes that cost $100 for your partner, you'll know that's the only gift you're getting them. 

It also helps keep you organized, which is helpful when you're out shopping and getting bombarded by sales, or when you receive a "special deal alert" email in your inbox. 

Of course, the easiest way to stick to your budget after setting spending limits is to either get a gift card or give cash in the exact amount you can spend, but these options tend to be controversial.

3. Use the 4 Gift Rule

This is popular with parents for kids, but you can apply it to anyone.

The key is to get something:

  1. They want
  2. They need
  3. They can wear
  4. They can read

And that's it. You can use this in conjunction with your spending limits, but it also puts a limit on how many presents you can buy, which can help you focus your spending. 

Let's face it — every year, there are more and more options when it comes to buying presents, especially when it involves kids or electronics. For the most part, this rule is practical and ensures you're not buying presents just for the sake of it

Plus, if you're a parent, you're most likely familiar with how much stuff kids can acquire on Christmas. This helps keep your home slightly less cluttered. 

While there's a lot of pressure on parents to provide a nice holiday experience for their kids, there's no reason you need to spend a ton of money to do it.

By focusing your efforts on these four areas, you can set expectations for the holidays going forward, which means less stress year-after-year!

4. Suggest a Gift Exchange

This works well for people who have huge families. It's one thing if you have 5 or 10 people to buy gifts for, but buying gifts for 30+ people is a different beast. Your spending can very easily get out of hand when it comes to having that many people to keep track of! 

So instead, try suggesting to your family that you all get together for a simple gift exchange. Each person brings one gift valued at $X, and you do the holiday grab-bag style. 

This might not work if you have strong holiday traditions, but it can be a good solution for a work environment, a gathering with friends, or maybe with your immediate family, if not your extended family. 

5. Try a Giftless Holiday Experience

Some people get so caught up in the consumerism of the holidays that they forget what this time is all about: spending time with loved ones, kindness, and gratitude. 

This isn't a popular suggestion, and again, if your family has deep holiday traditions, they might find it crazy, but some people aren't celebrating the holidays with presents. Instead of spending money, they're spending their time. 

You can still experience holiday cheer by volunteering or donating during the holidays. For example, many places accept volunteers the morning or day of Christmas to help with activities such as meals and community events. 

The point is you can create new holiday traditions that aren't centered on presents. Maybe you and your family simply get together and have a meal, watch a movie, or play games. There's nothing wrong with having unconventional traditions that focus more on giving than receiving. 

6. Take the DIY Route

If your family doesn't take to the gift-less or less-gifts suggestion, you can always save money by making presents yourself. This tends to be more thoughtful, and you don't have to spend a lot of money to make a nice present. 

Do you have any hobbies such as drawing, painting, or digital design? You can always create cards or decorations. Do you enjoy writing? Pen a poem or short story centered around the holidays, or retell a favorite family story. 

Are you crafty? You can knit blankets, scarves, or gloves for people; you can make your own soap bars; you can bake treats and create goodie baskets; you can make a ceramic tree or snowman — the possibilities are endless. 

Since you can go down a rabbit hole of making all these presents, try sticking to one and buy your materials in bulk. It will be cheaper that way, and although DIY costs more of your time, it's usually more fulfilling and less stressful. 

Stay True to the Holiday Spirit

Budgets may seem restrictive, but ultimately, they're tools to help you live a better life when used correctly. Do you want to worry about how much you've overspent on your credit card this season? Or worse, worry about your card being declined while in a long line? 

Your loved ones should understand that you don't want to overextend your resources in the name of the holidays. That's not what this time of year is about. Focus on spending your time and energy on the people you care about, and they should appreciate the effort and thought behind your actions.