A 6-Step Plan for a Holiday You Can Afford

Each year, millions of holiday shoppers set a budget for how much they plan to buy during this most festive time of year. But how much do they really spend?

According to the National Retail Federation’s 2016 forecast, Americans are expected to spend $655.8 billion — 3.6 percent more than last year — during November and December. That is a lot of spare change.

If you struggle to keep your spending under control, check out this six-step guide on avoiding the temptation to go overboard this holiday season.

Step 1: Create a budget

Stanislav Vinogradov / Shutterstock.com
Stanislav Vinogradov / Shutterstock.com

Many shoppers skip a written budget, opting instead for a hazy idea of what they can afford.

Let’s be clear: A hazy idea is not a budget.

Within the next week, sit down — with your significant other if you share the bills — and write down your holiday budget. To do this, you need to:

  • Brainstorm every gift you need to buy. A common mistake is leaving out all of the little gifts that can add up. They include the “white elephant” gift for the family party, gifts your bosses, colleagues, customers and clients, the “Secret Santa” exchange at the office party, and all those tips for service workers.
  • Write down all holiday food expenses. Your normal grocery budget isn’t likely to include things like the fixings for a family feast or ingredients for dozens of cookies.
  • Assign a dollar amount to every line item. Every person and event needs a specific budgeted amount.

Once you add it all up, decide if you can afford it. If not, pare down or eliminate some spending.

Step 2: Get creative

SAQUIZETA / Shutterstock.com
SAQUIZETA / Shutterstock.com

If you don’t want to eliminate people from your gift list, it’s time to get creative. Consider giving gifts that may cost you more in time than money.

Crafty folks have all sorts of options, from knitting scarves to creating photo scrapbooks. Go online and find instructions for inexpensive handmade gifts such as:

  • Baking mixes
  • Bath salts
  • Decorated bookmarks
  • Painted picture frames
  • Rice bag warmers
  • Coasters

Don’t overlook other types of gifts. Your great-uncle may not need another knickknack, but he might need someone to rake the lawn. Your grandma might appreciate the simple gift of your company for an afternoon.

For gifts of time or service, create a decorative homemade gift certificate or coupon to place in a card.

Step 3: Inventory what you have

Uber Images / Shutterstock.com
Uber Images / Shutterstock.com

Some people are appalled at the idea of regifting, but there’s no good reason to keep things you don’t use or like.

Step 3 is about more than regifting, though. It’s about looking through the house for anything that could be used to reduce your holiday budget.

Maybe you went a little wild during the last Yankee Candle sale and have a stockpile of scented wax in the closet. Perhaps you can redeem credit card rewards points for gift cards or merchandise.

Depending on your family dynamics or the age of the recipient, you may even be able to gift gently used items. In fact, that may be the preferred way to find an item for white elephant exchanges and the like.

Step 4: Start now

Maksim Shmeljov / Shutterstock.com
Maksim Shmeljov / Shutterstock.com

Waiting until the last minute is a surefire way to blow your budget. Shopping on Dec. 23 can make you desperate to buy the first thing you see.

By starting before Black Friday, you’ll have plenty of time to watch for sales and coupons for the gifts you need. Plus, the crowds will be more manageable.

Starting early also gives you time to make some homemade gifts.

Step 5: Track your money as you spend it

kikovic / Shutterstock.com
kikovic / Shutterstock.com

Holiday spending can add up quickly, so you need to track the money you spend from the moment it leaves your wallet.

A smartphone app may be the best way to ensure you’ll always have your budget with you. Goodbudget lets you set up 20 envelopes. For the holidays, you could use one envelope per person if your list is that small.

Holiday-specific spending apps also include:

If you prefer, an old-fashioned pen-and-paper tracking system also works.

Step 6: Stop shopping

AlexMaster / Shutterstock.com
AlexMaster / Shutterstock.com

This final step may be the most difficult for some.

Once you have found the right gift, purchased it and crossed the person off your list, stop shopping for him or her. Stop looking at ads and stop browsing displays with that person in mind. When your entire list is complete, stop shopping altogether.

Unless you went under budget on your previous purchases, any more buying is liable to break your piggy bank.

If you do see something you absolutely must buy for someone already crossed off your list, return the item you previously bought instead of spending more money on that one person.

How do you do each holiday season? Do you stay on target, or always find yourself spending more than expected? Share your experience with us on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Beware These 3 Tax Penalties on Retirement Accounts
Beware These 3 Tax Penalties on Retirement Accounts

Protecting a nest egg is tough — but you can make the situation far worse with some boneheaded mistakes.

5 Ways Retirees Can Lower Their Income Taxes
5 Ways Retirees Can Lower Their Income Taxes

Here’s how to keep Uncle Sam’s mitts away from your nest egg.

25 Things You Should Never Buy — and What to Buy Instead
25 Things You Should Never Buy — and What to Buy Instead

If you really want to save money, become a more intentional shopper.

10 Things That Can Ding Your Social Security Payments
10 Things That Can Ding Your Social Security Payments

Here are 10 things that could mean less money in your pocket during retirement.

10 Ways to Nail Savings on Your Remodeling Project
10 Ways to Nail Savings on Your Remodeling Project

Here’s how to save on your next remodeling project with discounted materials and more tips and tricks.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.