Please ensure Javascript is enabled for purposes of website accessibility

How to Keep Your Holiday Spending Under Control

By Christy Bieber – Nov 18, 2019 at 6:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These five tips will help you avoid blowing your budget or ending up in debt because of the holidays.

The holiday season should be an enjoyable time to count your blessings and celebrate with those you love. Unfortunately, for many Americans, it's instead become a season of budget busting -- or even taking on debt

Spending too much during the holidays can leave you struggling to pay the bills when the new year arrives. And if you borrow money, you may be stuck with the debt for months or even years to come. This can be a big problem if you end up committing too much of your income to covering the costs of holiday spending and can't accomplish other financial goals -- such as investing in a retirement account.

The good news is, you don't have to go overboard on the festivities in a way that compromises your financial security. In fact, there are plenty of ways you can limit the amount you spend during the holiday season while still having a great time. To help you out, here are a few key tips. 

Woman holding shopping bags and walking by holiday decorations.

Image source: Getty Images.

1. Set a holiday budget so you'll know how much to spend

You can't limit spending to a reasonable level unless you know what amount of spending is reasonable for you. So set a budget for all of your holiday extravagances at the start of the season.

You may decide on one big limit for everything related to the holidays -- including travel, gifts, and entertaining -- or you can establish separate limits for different categories of holiday spending.

Be sure your budgeted amount is an amount you can comfortably cover in cash. You don't want to borrow money, get stuck paying interest, and make every holiday purchase more expensive. If you've absolutely no money saved for the season, set a budget as low as possible to cover the absolute necessities and make a plan to start saving for next year as soon as this year's debt is repaid. 

2. Limit who you're buying gifts for

When you're doing the holidays on a budget, you probably don't want to spend a fortune on gifts for people out of obligation. So if you have people on your list who you aren't overjoyed about getting a gift for, consider having a conversation about forgoing the present exchange. Chances are good that if you're buying just to be polite, the gift recipient is probably not too excited about getting you a present, either. You may both be relieved not to have to do the obligatory exchange. 

With adult family and friends, you may also decide to do a secret Santa instead of everyone exchanging presents. While you may love buying for each other, many adults don't actually need very much, and everyone would probably be better off saving the cash being spent on presents. 

3. Set price limits on presents

If you have people you want or need to exchange gifts with, see if you can set up a limit on how much you'll each spend. Capping the price of presents means you won't feel the need to go overboard and blow your budget. And it can force you to be more creative to find something the recipient will love that's within your agreed-upon limit. 

4. Look for homemade or free alternatives to expensive gifts

Sometimes, the best gift you can give is the gift of time -- and that won't cost you anything. Instead of buying expensive presents, for example, offer to babysit for a harried new mom or watch your friend's dog the next time she goes on vacation.

Giving of yourself can be much more generous than just buying another item, and your friends and family may be touched by your personalized approach.

If you're creative, also consider a homemade gift instead of a store-bought one. Crochet, knit, or cross-stitch something, bake some delicious gourmet treats, or turn to your other talents to make something special and one-of-a-kind for the people in your life. 

5. Host holiday events on a budget

If you tend to blow your budget on throwing an expensive holiday party or going out to lots of costly dinners with loved ones, look for ways to limit what you're spending on these outings. You could suggest a pot-luck dinner at home instead of a big restaurant event, for example, or throw an afternoon cocktail party with hors d'oeuvres instead of a more expensive sit-down dinner.

The holidays don't have to lead to excessive spending

Enjoying the holiday season doesn't require you to spend every last dime in your bank account. In fact, you may find that you'll like the festive season a lot more if you follow these tips and don't worry about the impact overspending or holiday debt will have on your finances for months or years to come.

The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.