‘Tis the season for spending! Or, at least, that’s how it can feel sometimes. America is big on the idea of gift-giving during the holidays – sometimes at the cost of our savings.

Based on the National Retail Federation’s (NRF) Holiday Consumer Spending Survey, consumers plan to spend an average of $998 for the 2021 holiday season. Most of that will go to closer relationships, like family, friends, and co-workers. But over 20% will go to non-gift items, such as decorations and food.

And it’s hard to avoid that much spending. It’s part-and-parcel of our culture. We see gift-giving on our social media timelines, movies, magazines, and more. But just because the pressure is on to spend a lot doesn’t mean you have to. Here are a few ways you can stick to a budget over the upcoming holidays.

Create a List of Holiday Expenses

Living through the holidays is part joy, part survival skills. How else are you supposed to combat hordes of disgruntled shoppers and hungry family members? You need some level of tactical strategy, and a list of holiday costs will be the basis for that planning.

This will probably require some guesswork since chances are you didn’t save receipts from last year. But that’s okay. This step should merely give you a framework to help you calculate your budget later. So, it’s okay if it’s not perfect.

At this stage, all you have to do is make a list of the expenses you expect to pay throughout the holiday season. That may include costs like gifts, wrapping paper, food, and charitable donations. It will help if you can create a detailed shopping/gifting list, too. Meaning you write down every gift idea you have, every food item you need for events, and any potential financial donations. You can also jot in the approximate cost of each item and gift.  

Remember: Keeping track of your holiday budget and spending this year will help you prepare for the next. So, keep and file your receipts somewhere safe so you can revisit them next year.

Decide Your Seasonal Spending Limit

After you create your list of expenses, you can figure out the finances. This step is crucial to creating your holiday budget. Essentially, you need to find out how much you can afford to spend on this list.

Needs vs. Wants

One of the basic foundations of a budget is figuring out what’s a “need” versus a “want.”

A need is something you have to pay to support your day-to-day life. Or, something you may face a consequence for if you forget it. That includes things like utility bills, grocery costs, and loan repayments. Just because it’s the holiday season doesn’t mean you can forget those.

In contrast, a want is something you can live without, but you enjoy. Around this time, that might involve certain gift ideas, entertainment, and treats.

You might also need to further break down these categories to help inform your spending. For example, you might have multiple gifts you need to purchase in the want category. But some may be more important to buy than others. So, consider prioritizing each item in both categories. Then, reorganize your list of expenses based on their importance once you’re done. That way, you don’t get caught debating at the cash register.

Set Aside Funds

Once you have your list of expenses broken into needs and wants, you can put away money for them. And you can allocate more funds where you need to, depending on your situation.

Ideally, any spending on wants should be done out of your available savings and cash. That way, you don’t come out of the winter season with more debt on your plate. For some, this stash of savings might have come from a change jar you added to throughout the year. For others, you might dip into a nest egg you built up over time. Either method is fine as long as it doesn’t come at a significant financial cost to you.

Try to be realistic, too. For example, if you have to buy gifts for 25 people, then you probably can’t spend $100 dollars on each of them. So, try to find a reasonable budget for each person, not just each gift. It’s better to be tough during the planning phase and have some money left over than to be scrambling for presents with empty pockets.

Revisit Your Numbers

When you add everything together, you may find that your total is more than your spending limit allows. If that happens, go back to your numbers and move them around.

That may involve making some cuts to lower-priority areas. For instance, let’s say you go over your budget by $200. But you see that you allotted $200 for a holiday get-together with your work friends. You also put aside $100 for an outfit to wear at the party. You can pull something old out of your closet to save the $100. And find a way to pull $100 out of the party budget by making the event a potluck. Try to get creative with it!

You might not have a mind or the time for numbers, though. In that case, consider technology your best friend. Envel makes it easy to budget with its Envelopes system. You can split up your spending money into different categories with them, such as “Gifts for Mom” or “Christmas dinner.”

Track Your Spending

Once the holiday season starts ramping up, you need to keep an eye on your spending. It’s easy to overspend if you’re not careful. So, keep track of what you buy.

You can do this preemptively and bring your gift list along to your outings. Then you can cross things out as you purchase them. If you don’t want to drag around a physical sheet, take advantage of your phone. You use notes on your phone, or you can try to find an app that can track the expenses .

But don’t just watch your gift-buying. Make sure you also pay attention to any other holiday spending, like outings or events. As you put money into these various things, subtract the amount from your overall holiday budget. That’ll ensure you stay mindful of your total limit.

Shop Smarter, Not Harder

How much you actually spend and save during the holidays will depend on you. But there are plenty of ways to cut costs if you’re careful.

Your best bet is to shop strategically. To start, take advantage of any pre-holiday sales and use price-comparison apps to check any offerings. After all, something may look good on paper, but you might be able to find a more competitive price somewhere else. Also, make sure to collect any rewards available when you use your credit card to shop, like cash-back.

Online shopping can also come with its financial benefits. Oftentimes, online retailers offer check-out or first-time coupons that help you cut down on the overall cost. Or, at the very least, they help halve shipping prices. Plus, it’s easier to compare prices when you buy online. There are also second-hand stores that help you get items on your gift list at a fraction of the cost.

Go Homemade

You don’t always need to have a car waiting in the driveway or tickets to Spain in a stocking. Sometimes people just want to know you thought about them.

There are plenty of resources online that can instruct you on DIY gifts. For example, you might want to try a knitting project and make a scarf for your sibling. Or, you can make a scrapbook for your friends that showcases all the fun times you had together. The sentimental value of presents like these can mean a lot more than a lengthy price tag.

Don’t forget you can go homemade when decorating, too. Try cutting out snowflakes to hang around the house. Or, make your own centerpieces for the family holiday dinner. They add personality and help you get into the holiday spirit without costing a fortune.

The Bottomline

Spending money during the holidays can bring out a lot of stress. You have to find the “perfect” gift and spend “xyz” amount. But these are all just social rules – they don’t actually have any weight. The most important part of the holidays is to spend time with your loved ones. If you can find ways to show how you care using your money, that’s great! But there are plenty of other low-cost, impactful ways to communicate your appreciation.

For instance, your mom may not want a new diamond necklace. Maybe she just needs a bit of extra help around the house during the winter. Or maybe you can offer to cook more often for your significant other.

But more than anything, enjoy the time you have together!