18 Ways to Financially Prepare for the Holidays

The holiday season is many people's favorite time of the year. It's an opportunity to catch up with family and friends, exchange gifts, eat delicious food, and enjoy a little time off from work. But there's one thing that almost everyone dislikes about the most wonderful time of the year -- its cost.

Between food, gifts, and possibly travel expenses, the holidays aren't cheap. Failing to plan for these costs is a recipe for stress -- and perhaps debt -- that could haunt you long after the holidays are over. Here are 18 things you can do right now to prepare for the upcoming holidays.

Create a list of all of your family and friends that you intend to buy gifts for and assign each of them a dollar amount. You should also estimate how much you expect to spend on food and any travel costs, including gas, airline tickets, or a hotel. Total up all of your holiday expenses to figure out how much you need to save to cover these costs.

When buying gifts, resist the temptation to add others to your list or overspend. Doing so could leave you unable to afford to buy gifts for others on your list or cause you to incur debt that you'll still be paying off months after the holidays.

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Keep your holiday savings in a separate savings account or make a note of how much of your current savings is intended for holiday savings and update this with each paycheck. If you intend to do most of your holiday shopping in cash, you can keep your money in envelopes -- one for gifts, one for food, one for decor, and so on. Just be careful not to lose them.

Set aside some money from each paycheck based on the budget you've created until you've saved enough to cover all of your holiday expenses. The earlier you start on this, the easier it will be to build these costs into your budget.

If you're struggling to save enough to cover your holiday expenses, look over your budget for areas you can cut back. You could cancel or pause some of the subscriptions you're signed up for, dine out less, or seek out more affordable forms of entertainment. Resist the urge to buy items from your want list. This will help you save more money and it'll also give you ideas to tell people when they ask about what you'd like for the holidays.

A seasonal job is another way to make ends meet. Many stores hire additional workers to help them during this extra-busy time and this can be a great way to earn some extra cash to cover your expenses. This might not be possible if you have a 9-to-5, though.

You could also try starting a side hustle on your own. If you're crafty, you could make homemade Christmas gifts or decorations to sell to others. Or you could choose something that's not related to the holidays at all. Take advantage of your knowledge, skills, and interests to build a side business that you can run all year round if you choose.

Waiting until the holidays are a week away to start shopping limits your options and it could cost you more. You'll have to pay whatever price the store is asking because you won't have time to shop around or wait for a sale or coupon code, and you might end up paying extra for shipping if you want the gift to arrive before the holidays.

Start shopping for travel arrangements well in advance too. Prices fluctuate over time, but they tend to be cheaper when you book several months in advance than if you wait until the last minute.

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Black Friday is what most people think of when they think of holiday sales, but you don't have to wait until then. Stores run sales all the time and you don't have to wait until the holiday season is upon you to take advantage of them. Shopping this far in advance might also make it easier to find the specific items you're looking for whereas they might be out of stock if you wait until everyone starts buying gifts to order them.

Comparison shopping is easier to do online, but if you bring your smartphone with, you can check prices at other stores wherever you are. You might be able to find the same or a similar item elsewhere for cheaper than you were expecting. Planning this well in advance can make your shopping go much smoother when you are ready to buy.

If you're an online holiday shopper, you have to remember shipping costs as well as the cost of the items you're purchasing. Some stores offer free shipping on purchases over a certain amount, and you can take advantage of this if you plan well. Try to limit how many different stores you buy gifts from online so that you can minimize how much you pay in shipping costs. And if you can purchase an item at a store near you, always do this unless it's significantly cheaper online.

You can limit how much you must pay out of pocket by taking advantage of credit card rewards. Cash-back rewards can go toward gift purchases and travel rewards can cover the costs of a flight or hotel when you go to visit family. Start banking your rewards now by using your card strategically and taking advantage of any bonus categories available.

You can also use your credit card to cover your holiday purchases, but be careful if you've been known to carry a balance. Any rewards you might earn from using your card to buy holiday gifts will likely be wiped out by the interest you'll pay back to get rid of the debt.

ALSO READ: How to Maximize Your Credit Card Rewards

Several studies have shown that we're more likely to overspend when using a card instead of cash. So sticking to cash only is a smart way to help yourself stay out of debt this holiday season if you're prone to overspending. But it might not work for everyone. Online shoppers can't pay with cash, so they won't have any choice but to fall back on a credit card.

Subscribe to the mailing lists of the stores you often shop at around the holidays and watch out for coupons. You can also search for coupon codes online. You don't have to wait for the holidays to do this, and if you find a good coupon before the holidays, you might be able to get a better deal on a gift than you would if you'd waited on holiday sales to begin. Be mindful of the coupon's expiration date so you don't accidentally wait too long to use it.

Save yourself some money by making thoughtful homemade gifts instead of spending a bunch of money on store-bought gifts. If you go this route, you'll have to budget your time accordingly to ensure that you have enough time to finish everyone's gifts over the holidays, and you might still have to spend some money on materials. But in the end, you'll be able to deliver a one-of-a-kind gift while still spending less than normal.

A gift exchange is another alternative if you're trying to keep your holiday costs low. Reach out to your family and friends to see who would be willing to participate and set a price limit so you know how much to spend. Then, you can focus your attention on choosing a thoughtful gift for one person instead of gifts for a dozen people. Try to put the word out before everyone starts their holiday shopping for the year or else you may not find that many people willing to join in.

ALSO READ: Americans Have Big Plans for Their Holiday Gifts: Returning Them

When you go holiday shopping, especially if you go on Black Friday, create a list for yourself and stick to that list. It's tempting to purchase things you don't need simply because the store appears to be offering a good deal, but this is one of the most common ways people ruin their holiday budgets.

If you do want to stay open to great holiday deals, build an extra cushion into your budget for any unexpected items you might come across that you want to buy. Just make sure you don't exceed this limit.

Gifts are the most common holiday expense, but many people also like to share their money with the less fortunate by donating to charities. Don't forget to include these costs in your holiday budget as well. Start thinking about which charities you'd like to donate to and how much you'd like to budget for each.

You should also keep a record of your donations because you may be able to write some of these off on your taxes for the year. If you're donating more than $250 to a single organization, get that organization to sign something verifying your donation. You don't have to turn this into the IRS, but it could ask you for it if you get audited.

People underestimate the costs of holiday meals and they're difficult to plan far in advance because food only keeps for so long. If you aren't willing to pay the full cost of a holiday meal, consider asking family members to each bring a dish to share. This allows everyone to feel that they contributed something and to sample different types of foods without meal preparation taking up too much of anyone's time or budget.

This is easier to do if you plan ahead. Decide on the types of foods you need or break it down into categories -- main course, side dishes, desserts, etc. -- and assign each person an item to bring or make.

My family and I often travel around the holiday season and we've saved quite a bit of money by being flexible with our travel dates. Because most people want to be at their destination by Thanksgiving or Christmas, we've often gotten some of our best deals by being willing to travel on the holiday itself. You also typically score cheaper flights if you're willing to travel midweek.

ALSO READ: 3 Ways to Save Money on Holiday Travel

Many travel booking sites will give you a discount if you purchase your hotel, flight, and rental car through the same site, rather than just booking one of those things. Once you know when you plan to travel, compare offers on several travel sites to see which offers you the best deal. As I mentioned before, the earlier you begin shopping for travel deals, the better the prices you're likely to get.

Try some or all of the previous tips to help make your holiday season a little easier on your budget. Don't wait to start planning because the holidays come up faster than you think. Beginning today is the best way to ensure you're financially prepared before the holidays arrive.

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