The holidays are a time of joy and celebration, but for many, they also bring financial stress. According to recent data, 58% of U.S. adults experience financial stress during the holidays due to spending concerns (Harris Poll, 2023). In fact, 70% of Americans report overspending at this time of year, with millennials and parents feeling the financial pressure the most (Rocket Money, 2022). Fortunately, with some intentional planning and practical choices, you can enjoy the holidays while protecting your financial well-being. Let’s dive into strategies to help you keep holiday spending in check and focus on what truly matters.

Managing Holiday Expectations

The holidays often come with heightened expectations and pressures, which can lead to overspending and stress. From navigating family gift expectations to the desire to make everything “perfect,” these pressures can certainly detract from the season’s joy. Setting healthy boundaries and realistic expectations with loved ones helps everyone enjoy the holidays without the burden of financial strain. Here’s how:

Set Spending Limits Together: Having an open, honest discussion with family about spending limits can ease expectations and keep everyone on the same page.

Prioritize Thoughtful Gifting: Share your approach to thoughtful, non-expensive gift-giving. Explain that prioritizing financial goals can still honor the spirit of giving without compromising financial health.

Suggest Budget-Friendly Alternatives: Propose cost-effective, fun traditions like Secret Santa, homemade gifts, thrifted gifts, or gift exchanges that everyone can enjoy without the stress of overspending.

Model Meaningful Gift-Giving: When you show others that you value the thought and sentiment behind gifts, it encourages a focus on the experience rather than price.

Create Traditions Over Gifts: Traditions like baking family recipes together or starting an Advent calendar bring lasting joy and make the holidays meaningful without a heavy financial or consumerist focus.

Refocus on What Matters: Emphasize gratitude, charity, family, and fun over consumerism. Let loved ones know that you value quality time and that it’s not about the price tag but the thought and connection behind the gesture.

Happy, Intentional Holidays

A key to managing holiday stress is being intentional with your time and spending. It’s easy to feel pulled in many directions, but aligning your holiday plans with what truly brings joy can keep the season fulfilling and balanced. Here’s how you can set a holiday vision and make thoughtful choices:

Create a Holiday Budget: A budget provides clarity and peace of mind, helping you avoid overspending. Consider setting limits for each holiday expense category to keep everything manageable.

Gift in Line with Your Values: Align your purchases with personal values by supporting local and small businesses, choosing sustainable gifts, or selecting handmade items. (As a hobby Etsy seller, I support this!)

Prioritize Family Time: Take breaks from work or holiday prep to spend quality time with loved ones, creating memories rather than focusing on shopping.

Give Back: If giving back is part of your holiday values, consider making a donation, perhaps on Giving Tuesday, to support causes close to your heart.

Set Spending Boundaries: Establishing rules or guardrails, like only shopping with cash, can keep spending constructive and intentional.

Stay Kind to Yourself: If you go over budget or deviate from your plan, be gentle with yourself. It’s normal, and self-compassion is as valuable as any other holiday gift.

Involving Kids

The holidays are a wonderful time to model and teach healthy financial habits for children. Rather than emphasizing cost, focus on creativity, generosity, and mindful spending. This approach helps children see that joy comes from thoughtfulness rather than price tags. Here’s how you can create valuable learning moments with kids this season:

Encourage Creative Gift-Making: Involve children in making gifts, which builds resourcefulness and allows them to participate meaningfully in the holiday experience.

Model Positive Money Conversations: Talking openly with children about spending and saving choices can normalize financial conversations and create healthy habits for life.

Teach Values Through Language: Rather than saying, “We can’t afford that,” try phrases like “We’re choosing to save for something special,” or “We prioritize spending on things we care about.” This approach teaches intentionality and focusing on what’s meaningful. Check out the book “The Opposite of Spoiled” by Ron Lieber, which provides guidance for teaching kids about gratitude, spending, giving, and financial responsibility.

Setting a Holiday Spending Plan

A well-thought-out spending plan is one of the most effective ways to avoid holiday debt and enjoy financial peace. Without a plan, it’s easy to overspend and regret purchases, so setting a clear spending cap and budget can help you maintain control. Here’s how to create a comprehensive holiday spending plan:

Set a Total Budget Cap: Start by reviewing your household finances and any past holiday spending. Based on this, set a maximum budget for holiday expenses. If budgeting feels overwhelming, consider reaching out to a financial coach for guidance.

Work as a Team: If you have a partner or friend, plan your holiday expenses together and check in to keep each other accountable.

Prioritize Spending by Category: Break down your holiday budget by gifts, decorations, travel, entertainment, and charitable giving, and set a limit for each. Plan for things like:

• Gifts: Make a list and set a specific amount for each person.

• Travel: Detail travel costs in advance to prevent surprise expenses.

• Entertaining: If you’re hosting meals or gatherings, consider setting aside funds specifically for these.

Track Spending in Real Time: Track holiday expenses as they happen through an app, spreadsheet, or notepad to stay on top of your budget.  

Plan for Surprises: Set aside a small “buffer” fund (5-10% of your total budget) for unexpected holiday expenses, which can help you stay on track.

Gifting Ideas on a Budget

The best gifts aren’t always the most expensive. Thoughtful, low-cost options are often more meaningful, and they don’t have to strain your budget. Here are some creative ideas to inspire budget-friendly, heartfelt gifting:

Prioritize Experiences: Consider experiences like cooking a meal together, going to a local event, or taking a class as a family. These moments create lasting memories without high costs.

Gifts That Give Throughout the Year:​ Set up recurring gift dates, like having dinner together monthly or visiting Grandpa with home-baked cookies once a month.

Gift Time or Skills: Offering to help with yard work, home organization, tech support, babysitting, or cooking is a practical and appreciated way to show love and support.

Opt for Group Gifts: For bigger-ticket items, you could pool resources with family or friends to share costs.

Get Involved in Your Community: Join local online Buy Nothing groups or similar online communities where people give away items for free.

Donation in Their Name: For the person who “has everything,” consider making a small donation to a cause they care about. It emphasizes values and makes a positive impact while honoring their interests.

Avoiding Holiday Debt Traps

Holiday debt can sneak up quickly, especially when credit cards, social media, and advertising create a “buy now” mindset. Learning to spot and avoid these traps can help you manage spending and keep post-holiday stress low. Here are some strategies to sidestep debt this season:

Plan Ahead and Stick to It: Without a spending plan, it’s easy to go overboard on impulse buys, especially when relying on credit. Identify your spending "kryptonite”: those situations or places that tempt you to overspend; keep them out of your plan and commit to steering clear this season. Create a shopping list - perhaps even writing it out on paper - and challenge yourself to stick to it.

Avoid Credit and “Buy Now, Pay Later” Temptations: You see them everywhere: Klarna, Affirm, AfterPay…These BNPL options encourage buying things you can’t afford and can make it easy to overspend, leading to debt that lingers long after the holidays. And is it really “no interest”? If you are late, forget, or can’t make a payment, you will be charged hefty fees and accrued back interest. The BNPL business model is betting on your failing to pay what you owe.

Limit Social Media Time: Social media can spark envy and FOMO, with curated holiday highlights that don’t show the full picture. Reduce holiday stress by setting time limits and avoiding impulse shopping triggered by ads.

Watch Out for Marketing Tactics: Brands use urgency tactics, like “only 4 left” or countdowns, to create perceived scarcity, trigger impulse buys, and instill FOMO. Be mindful of these aggressive tactics and avoid impulse purchases by sticking to a list.

Delay Gratification: Practice patience by “sleeping on it” before making a purchase, waiting 24 hours to buy. And if you happen to miss the “sale”, most items will be discounted again later.

Finding Holiday Deals: Smart Shopping Strategies

The holidays are a time for giving, but with all the deals and promotions, it’s easy to spend more than you planned. Smart shopping doesn’t just mean finding discount; it’s about making purposeful choices that align with your budget and gift list. Here are some strategies to help you save on your planned purchases while keeping holiday spending under control.

Stick to Your Plan: Holiday shopping can be full of tempting deals, but sticking to your budget and gift list is key. If an item wasn’t on your list, it’s not a real savings; buying it just because it’s discounted means you’re spending, not saving.

Maximize Online Savings and Cash Back: There are plenty of ways to boost your savings on planned purchases. Try these strategies to make the most of every dollar:

• Stack Coupons: Some websites allow you to use multiple coupons to save more on a single purchase.

• Redeem Credit Card Points: Use points to offset costs or redeem for gift cards, making gifts more affordable.

• Cash Back Credit Cards: If you have a cash back card and can pay off your balance in full each month, use it to earn while you shop.

• Free Shipping: Look for free shipping codes or buy online and pick up in-store to avoid shipping fees.

• Cash Back Sites: Platforms like Rakuten, Capital One Shopping, and PayPal Honey offer cash back when you shop through their links. During the holidays many of these sites offer 10-20% cash back on your purchases. Savings can really add up!

Set Time Limits for Deal-Hunting: It’s easy to lose hours going down the rabbit hole, hunting for the perfect deal. Set a reasonable time limit to save both money and energy—your spare time is valuable too!

Plan for Next Year

When the holidays are over, take time to set up a savings plan for the next season. Preparing in advance can make holiday spending easier and more enjoyable, and small savings can add up quickly. Here’s how to set yourself up for success in the new year:

Set a Savings Goal: Decide how much you’d like to have saved by next December to spend on holiday gifts, travel, entertaining, etc. Set up a monthly transfer of 1/12 the budget to your savings account to reach that amount by next December.

Use a High-Yield Savings Account: If you’re able to, consider setting up a designated high-yield savings account for holiday funds. You can earn some interest on your savings! Google “high yield savings account” for current rates.

Save Points and Rewards: Any reward points or cash-back options you accumulate could be added to your holiday fund.

With these intentional strategies, you can reduce financial stress and enjoy a holiday season that’s focused on the values and connections that matter most. Remember, a little planning goes a long way toward making the holidays joyful and financially sustainable!