How to Budget for Holiday Spending

It's easy to get caught up in holiday festivities and spend a little more than you'd planned. From parties to gift exchanges, the expenses can add up quickly. And if it seems like each year takes an even bigger bite out of your budget, you're not imagining things. From 2015 to 2019, holiday retail sales grew an average of 3.5% per year.1 In 2020, sales jumped 8.3% — for a total of $789.4 billion in spending. And shoppers bought a record $886.7 billion in gifts in November and December 20212, with increased showing through November of 2022. 

That doesn't mean you have to go over budget this year. With some careful preparation and the right tools, you can save money without sacrificing any holiday cheer.

5 Ways to Keep Your Holiday Budget on Track

Putting your holiday spending in check doesn't mean you have to celebrate like Scrooge. You can still have fun and give gifts with the right planning —which you should start now.

1. Prioritize your spending

If you come from a big family or have a wide circle of friends, it can be tempting to spend money on everyone. While you don't necessarily have to cut any loved ones from your gift list, you should prioritize how much to spend on whom.

Make a list of loved ones that you want to spend a little more on. Add up how much you expect to spend in total — and if you're over-budget, make adjustments to your lists as needed.

2. Start a separate savings account

When it comes to the typical family budget, most people set aside funds for regular expenses like bills, groceries, debt payments, etc. But what about those irregular expenses that don't happen every month, like holiday spending? That's where a separate account outside of your day to-day banking can help, where you set aside money throughout the year for a specific goal.

For instance, you can open a separate savings account for your holiday budget and deposit a small amount of money each month so you have all you need at the end of the year. Some banks and credit unions even offer specific holiday savings accounts with favorable terms like low fees or high interest.

3. Open a rewards card

If you're going to be spending the money anyway, you might as well get some back. Using a rewards credit card for your holiday shopping means you can earn cash back, points that can be redeemed for things like travel or credits to your statement balance. Just be sure to choose a card that doesn't come with an annual fee.

And remember that sinking fund you started? You can use the holiday savings you set aside to pay off your balance in full when the bill comes due, so you don't have to worry about a holiday debt hangover. Bonus: Look for a card that offers a 0% introductory APR, such as the Synovus Rewards Visa Credit Card. This will help out if you should go a little over budget.