Many people look forward to the holidays and all they encompass, from parties to family reunions to the exchanging of gifts. But all that hoopla and cheer comes at a cost, especially when it comes to showering friends and loved ones with hand-picked presents they're sure to love. Last year, the average American consumer spent $1,143 on retail purchases during the holiday season, according to Bank of America. At the same time, the typical U.S. adult also managed to rack up $1,054 in holiday debt.

Thankfully, it looks like many folks are being smarter about shopping this time around, according to data from Principal Financial Services. Here are two steps consumers are taking to avoid debt and manage their money.

Woman tying bow on wrapped gift


1. Saving in advance

Perhaps the best way to steer clear of debt during the holidays is to save for them in advance -- something 29% of Americans have managed to do. Now, if you don't have any holiday savings to show for at this stage of the game, it's unfortunately a little late for the current year, but that doesn't mean you can't do better in 2019. So do your best to keep your spending to a minimum in the coming weeks as you hit the stores, but at the same time, pledge that come January, you'll be setting aside a portion of each paycheck to save up for next year's holidays.

How much should you save? It'll depend on how much you'd ideally like to spend. If you're entering this holiday season without savings, you may have no choice but to be a bit more low-key on the gift front than usual, but if you save consistently next year, you'll have more options once the holidays roll around. But if your ideal holiday spending tab is somewhere in the ballpark of $600, you'll want to make sure to set aside $50 a month for that purpose.

2. Setting a gift budget

Just as it's important to follow a budget for your general living expenses, so, too, is it crucial to establish a gift budget when the holidays roll around. Without one, you might easily end up overspending and wrecking your finances as a result.

Fortunately, 54% of Americans are setting up holiday gift budgets this year, so if you haven't yet done the same, it's time to get moving. Doing so is pretty easy. Just figure out how much money you have to work with (whether from savings, earnings from a side gig, or leftover income from your regular paycheck) and then list the people you want to buy gifts for in order of priority.

For example, if you have $500 to spend and 10 people to shop for, you might decide that the three most important people in your life will get a $75 gift, and the remaining seven people will get something closer to $40. Or you might allocate your resources evenly among your various gift recipients. The choice is yours, but the point is to go in knowing how much you're able to spend.

The last thing you want to do is go overboard on the holidays and rack up debt in the process. Adopt the two smart habits above, and you'll avoid much of the stress so many consumers inevitably face this time of year.