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.
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.
Sign up for your favorite retailers' newsletters to find out about exclusive sales and promotions. Once the holidays are over, you can unsubscribe.
4. Learn to be a savvy shopper
One of the best ways to save money on holiday shopping is doing it online — and using technology to your advantage. But you don't need to be a tech genius to score extra savings:
- Sign up for promotional emails. One way to find out about exclusive sales and promotions is to sign up for your favorite retailers' newsletters. Once the holidays are over, you can unsubscribe — and remove the temptation to keep jumping on sales throughout the year.
- Add a coupon aggregator to your browser. Instead of scouring the web for coupons — and potentially missing out on hard-to-find codes — install a browser extension2 that does the work for you, like Honey.
- Sign up for cashback sites: In addition to using a rewards card, you can double-up on earnings by signing up for a cashback app3 or site such as Shopkick, Rakuten, or Ibotta. These companies pay you cash for shopping at certain retailers, no strings attached.
5. Setup account alerts
During the excitement and rush of the holidays, it can be easy to lose track of your spending or forget to check in on your accounts. Fortunately, you can set up low-balance alerts and get a heads-up from your bank if your account balance drops below a certain threshold. This can give you a chance to stop swiping and transfer funds to avoid pricey overdraft fees that eat into your holiday budget.
The holidays can be a stressful time, especially if you overspend and end up with a lot of debt to pay off in the new year. But it doesn't have to be that way. By making a plan ahead of time and starting a savings fund now, you can spend less time worrying about your finances and more time soaking up that holiday cheer.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- National Retail Federation (NRF), "NRF says 2020 holiday sales grew 8.3 percent despite pandemic," published January 15, 2021, accessed July 30, 2021. Back
- Alexandria White, "The 5 best browser extensions that automatically find coupons at checkout," CNBC, published April 29, 2021, accessed August 2, 2021. Back
- Natasha Gabrielle, "Best Cash Back Apps for 2021," The Ascent by Motley Fool, published April 19, 2021, accessed September 8, 2021. Back
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