Half of Americans Are Setting Themselves Up for Holiday Overspending

Don't go holiday shopping without this one thing.

With so many things on your holiday to-do list, it's easy to overlook how much you're actually spending until you have to pay for it. Nothing ruins holiday cheer quite like a huge credit card bill, and holiday overspending can lead to debt that follows you for months afterward.

There's a simple solution to this problem: Create a holiday budget. Yet 49% of Americans don't do this, according to a recent survey by YouGov, an international polling and market research company. It's your call, but creating a budget doesn't take long and it could save you a lot of financial stress over the coming months. Here's how to get started.

Make a list of all of your holiday expenses

Start out by making a list of all the extra expenses you expect this holiday season. Write down everyone you have to buy holiday gifts for and associated supplies, like wrapping paper and cards. If you're traveling, plan for flights, parking, and extra gas as needed. Those hosting will need to plan for increased spending on food, drinks, and possibly higher utility bills from running the dishwasher and the washing machine more often than normal.

Decide how much you can comfortably spend

Consider how much money is in your savings account and what you’ve managed to save for the holidays from recent paychecks. Don't spend any more than this if you want to stay out of debt. 

You have less control over the cost of travel and food than you do over gifts, so you might want to begin here. Figure out how much of your budget you need to carve out for travel or entertaining and set this money aside first. Then, assign a spending limit to each person on your shopping list using your remaining money. It's up to you to decide how to divide this. You could spend the same amount on everyone or spend more on your immediate family and less on others.

Look for ways to cut costs

Seek out ways to reduce your expenses, especially if your current budget doesn't allow you to spend as much as you'd like. Scan the internet and your local newspaper for coupons and information about upcoming sales. If you time your shopping right, you might be able to get the gifts you want at a lower price. Coupons could also help you shave a few dollars off your grocery bill. 

You might be able to reduce your food and gift expenses even further if you agree to do a potluck dinner and a gift exchange. This can significantly reduce how many gifts you need to buy and how many dishes you have to cook for the holidays. 

As for travel expenses, it's always good to start looking at flights or hotels as early as possible and watch for price drops. But if you haven’t booked yet, don’t panic. Those who wait until the week before the holidays only pay about 2% more on average. Being flexible with your travel dates will help too. Flights are often cheaper midweek and they may be cheaper on the holidays themselves than on the days shortly before or after them. 

Use credit card rewards to your advantage too. Cash back rewards can help with many purchases and travel rewards can help you save on flights or hotels. Check how many rewards points you have by reading your latest credit card statement or logging in to your online account.

Stick to it

Your budget is no good if you refuse to follow it. Keep referring back to it as you go and make note of what you spend so you know how much you have remaining for each expense on your list. Resist the temptation to buy things for yourself. Instead, recommend those items as gift ideas to friends and family or use any cash gifts you receive for the holidays to buy the item afterwards. 

The earlier you begin planning for the holidays, the easier it will be on your wallet, but it’s never too late to get your holiday spending under control. If you've already begun your holiday shopping, note what you've already spent and decide how much more you can afford. You might have to change some of your plans if you realize you cannot afford all of your expenses, but this is better than taking on debt that could potentially threaten your future financial security.