Six Festive-Yet-Frugal Holiday Budget Strategies

Many Americans tend to overspend toward the end of the year in the name of holiday festivity and cheer.

Perhaps you’re one of them. Perhaps, too, you’re one of the millions of Americans who have decided to try and rein in their spending this particular holiday season. 

With some clever money management techniques, it’s possible to stay on budget and enjoy a few thoughtful celebrations and indulgences without the typical holiday spending hangover. Here’s what we recommend. 

1. Establish a realistic holiday budget.

Many people are exploring what’s possible with smaller-than-normal holiday budgets this year, but going too small with your spending plan is a recipe for spending more than your budget allows. 

If you are going to stay within your budget, it has to be comprehensive and realistic. Make sure it accounts for your holiday plans, including meals, home decorations, travel costs, special events and activities, and other expenses. 

Looking for a way to cut back? Prioritize experiences and good food; consider cost-saving strategies for gifts. A lot of holiday overspending comes from buying more gifts or more expensive gifts than planned. When making your gift list, try to be realistic about who should receive a gift and how much you want to spend, or consider inviting your family to a gift swap, white elephant, Secret Santa, or other similar event.

2. Maintain a holiday savings account.

Once you establish your holiday budget, you need somewhere to stash your cash until you’re ready to start shopping. 

The easiest way to save is to maintain a savings account and set aside a predetermined amount that you will deposit every month. Most savings accounts will allow you to set up automatic cash transfers so you won’t forget to feed your holiday fund. iQ Credit Union offers an Easy Saver plan, for example, that rounds up debit card purchases to the nearest dollar and puts the change in your savings account.

Don’t skip setting money aside, even if it may seem like an odd priority earlier in the year. Think of it as the perfect gift to your future self: When November comes around and it’s time to spend, you’ll be delighted to avoid holiday budget stress. 

3. Plan ahead and shop all year.

Of course, if you can avoid a hefty holiday bill that’s concentrated at the end of the year, so much the better. 

Shopping year-round for holiday gifts is an increasingly popular strategy, and for good reason: It can allow for smarter spending, which we’ll talk about in a moment. 

For now, here’s a pro tip: If you tend to shop for the holidays 12 months a year, establish your budget early and keep a running tally of your gift purchases. (This will also help keep you from losing stray gifts in the back of the closet.)

If you’re getting started later in November or December, there are still ways you can leverage planning ahead: Keep track of your spending now, and save that information to include in your monthly budget next year. You’re giving your future self the gift of information while purchasing gifts for your loved ones right now! 

4. Shop the sales.

The holiday season itself can be an excellent time to purchase holiday gifts. Many consumers see Black Friday as the kickoff for the holiday shopping season. However, being proactive can pay off. Retailers know that the end of the year is prime shopping season and set their prices accordingly. So, no matter what cheery holiday commercials tell you, ‘tisn’t (necessarily) the season for great deals. 

If you can, look for better deals throughout the year. For example, January is a good time to buy winter clothing, and Memorial Day tends to have the best deals on appliances.

5. Shop smarter online.

Limiting yourself to what you can find on-location may not result in the most possible savings—not to mention that in-person shopping takes longer and comes with expenses itself, such as gas money. 

This isn’t new information. Consumers know this, and, as a result, Cyber Monday spending is starting to outpace Black Friday as more people order their gifts for the holidays online. 

In addition to completing your holiday shopping while cozying up on your couch, you can use online-only money-saving tools, such as Camelizer and Honey, to find and achieve even better deals.

6. Track your spending.

Don’t get swept up too much in a holiday spending rush! By tracking your spending, you’ll see clearly if you’re overspending or are right on track. 

If you have trouble tracking your holiday spending, there are tools that can make it easier for you. There are a number of smartphone apps, such as Mint, YNAB, and Honeydue, that can help you manage your spending.

These are just a few strategies that can help you manage your holiday spending and get more for your money. Managing your holiday budget shouldn’t be any more difficult than managing your household budget, but you need to pay attention to make sure spending doesn’t get out of control. 

We’re here to help you succeed this season and next. Interested in learning more about ways to manage your finances that align with your goals? We’ve put together a budgeting checklist for you to make staying on track as simple as possible.