How To Stick To Your Holiday Budget & Avoid Debt

Do you want to learn how to stick to your holiday budget? The holidays are here, and you may have a lot of expenses and spending on your horizon. The average person spends around $900 on gifts during the holiday season. And, this doesn’t even include other holiday spending that you may have, such as…

Michelle Schroeder-Gardner

Last Updated: December 19, 2020

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Do you want to learn how to stick to your holiday budget?

The holidays are here, and you may have a lot of expenses and spending on your horizon.

The average person spends around $900 on gifts during the holiday season.

And, this doesn’t even include other holiday spending that you may have, such as travel, food, decorations, and so on. There are also other expenses many people forget to budget for, like stamps, cards, shipping, etc.

According to a survey by MagnifyMoney, American consumers took on an average $1,325 worth of holiday debt in 2019.

That is a lot of debt to take on for holiday spending. And, the same study found that holiday debt has gone up by 34% since 2015.

If you are thinking that taking on debt for the holidays is okay, remember you have to think about the interest and finance charges that you will accrue as well. This can impact your credit score, your credit history, and more.

The holidays mean different things for different people, but for most everyone, it’s about celebrating with the people you love and care about – not debt. Going into debt for gifts just adds stress and it takes away from the true meaning of the holiday season.

One of the best ways to avoid debt during the holiday season is to learn how to stick to a holiday budget, and today I’m going to help you learn how to do exactly that.

Sticking to a holiday budget can help keep you out of debt so you can focus on having a happier holiday season instead of one that adds financial stress.

Content related to creating a holiday budget:

Here’s how to stick to a holiday budget.


Make a holiday budget NOW.

The first thing you should do is learn how to create a holiday budget.

Before you make a list of all the things you want to buy for the holidays, you need to set a realistic holiday budget for yourself.

This will help you stay on top of your spending so that you won’t go into any holiday debt.

To create a holiday budget, you will want to see how much money you already have set aside for the holidays and/or how much you can afford to spend on the holidays. Remember, you have other bills to pay this time of the year and emergencies can come up so be realistic with your budget.

If you want to learn how to budget for the holidays, you will need a list of who you’ll be buying for, the events you’ll be attending, any travel you’ll be doing, and go from there. It helps to think about all of the things you spent money on in previous years. You might be shocked by your spending!

Things that you will want to think about and maybe include in your holiday budget include:

  • Gifts
  • Transportation costs
  • Food for parties and get togethers
  • Postage and stamps
  • Holiday cards
  • Wrapping paper, tape, and other gift wrap supplies
  • Holiday decorations

And more.

Once you have a list and an amount of money you can realistically afford to spend on the holidays, then you will have to figure out how to stick to your holiday budget. That’s what the rest of this article is about.

I know how it feels to want to buy for everyone on your list and get bigger and better gifts every year, but that may not work for you this year. That’s okay! Your family and friends would rather you stick to your budget and not go into debt.


Give fewer gifts.

The holidays don’t just have to be about buying gifts for everyone. And, if you’re running low on time or money, then you may want to start cutting back on the number of gifts you give this holiday season. 

Keep your budget in mind and only buy what you can afford, even if that means you can only give one present. It’s the thought that counts, not the gift or the quantity of gifts that you can give.

Actually, more and more people are rethinking their holiday spending and taking more of a minimalist approach by giving fewer gifts and focusing on meaningful interactions with those they care about.


Don’t fall for all of those holiday gift deals.

Both online and in-person stores use sales to draw in shoppers, and these aren’t just Black Friday deals, they do it year around. Unfortunately, many of the deals you find during big sales aren’t actually deals at all. 

My least favorite holiday sales tactic is when stores mark items up just before they are marked down to make the sale price look like a good deal. 

Make sure you do your research on what you’ll be buying so that you can always purchase the best products at the best prices.


Get cash back on your holiday shopping.

If you’re shopping online, then you should be getting cash back on your purchases.

You can sign up for a website like Rakuten where you can earn cash back for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you will receive an extra $10 cash back!

I like using Rakuten for online shopping because it’s so easy to earn money, and you can even use Rakuten on Black Friday deals.


Find ways to cut your spending in other budget areas.

If you need to find money for your holiday budget, then you may want to try cutting back in other areas of your life.

Many households have expenses that they may be able to cut out of their budgets. You could temporarily do this in order to afford what’s on your list this holiday season. You may even decide to permanently cut those expenses so you can use that money for other things, such as retirement savings, your emergency fund, paying off debt, and so on.

Even if you can only find an extra $100 to move to your holiday budget, that’s still $100 more than what you had before.

To find money in your budget, you may be able to:

You can read even more ways to save money at 30+ Ways To Save Money Each Month.


Learn how to make extra holiday spending cash.

If you can’t find ways to cut back, then you may want to find ways to make more money. This can make the holiday season a little more enjoyable as you won’t have to go into debt or use your savings in order to purchase holiday gifts.

Plus, there are tons of things you could do to make extra money, starting with a part-time holiday job. Many companies hire extra help for the holidays, like UPS, Kohls, Macy’s, Christmas tree lots, restaurants, and more.

There are even side hustles you can start today to make some cash for the holidays. These are things like:

Learn more at: 18 Of The Best Ways To Make Extra Money For The Holidays


Try a Secret Santa gift exchange.

If part of your holiday celebration is gift giving with all of your family and friends, you may want to think about doing a gift exchange where everyone draws names and then only gives a gift to the person whose name they draw. 

This won’t just save you money, you’ll be able to put more thought into those gifts because you’ll have fewer things to buy.


Start early for next year.

I know many smart holiday shoppers who start shopping a year in advance – those are some amazing planning skills!

You may call them crazy, but I’m sure it saves them a lot of stress and money.

The earlier you start shopping, the more money you are likely to save. This is because you won’t be in a rush and end up buying something you didn’t need in the first place. 

Related money-saving tip: I highly recommend signing up for a FREE 30-day Amazon Prime account, as this can really help you save money when it comes to holiday shopping. This free 30-day account gives you unlimited FREE two-day shipping, you can borrow Kindle books, watch movies and TV episodes, and more. Plus, Amazon is full of holiday deals.


Start saving for next year.

While this tip won’t necessarily work for this holiday season, you can start saving and preparing for your next year’s holiday budget.

I would start by looking at what you’re spending this year, and use that as an approximate savings goal. You can then start setting aside a little bit of money each day, each week, or even each month. This can really take the sting out of the holiday spending season and prevent you from going into debt.

Another way to prepare for next year is by taking part in a holiday savings challenge, such as the $20 Savings Challenge. This is a great way to easily save $1,040 this year without noticing! All you have to do is put aside $20 each week for a year, meaning you’ve saved $1,040.


Enjoy your holidays.

No matter what holiday you celebrate, remember the real reason for celebrating.

You don’t need to spend a lot of money to be happy, instead think about spending more quality time with your loved ones. Spending quality time with your loved ones this holiday season is as simple as:

  • Hosting a potluck dinner
  • Having a baking day
  • Planning an outing rather than a gift
  • Making time to call or video chat with out of town friends and family

Time is often harder to give than anything else, and that’s because we only have so much of it. Your family and friends know this, and that’s why the holidays are such an important time of the year. 

How big is your holiday budget this year? Are you spending more or less money than last year?


*Magnify Money statistic

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Agree with the entire post, really helpful tips and suggestions

  2. I’ll definitely need to use these budgeting tips this budget this year. Thanks for the tips!

  3. Kevin Verghese

    I agree when going on holidays, I have personally felt that the budget tends to go out of hands. Having a proper budget and sticking to it quite necessary. Thanks for the tips.