The holidays are the most wonderful time of the year—but also the most demanding. Along with the joy and cheer that the holiday season brings, stress often accompanies it, especially when it comes to spending. The good news? A little planning can go a long way toward keeping your finances on track. By taking a few simple steps now, you can avoid last-minute strain, stay within your budget, and focus on what matters most this season: spending time with the people you love.
1. Create a holiday budget
First and foremost, setting a budget is the easiest way to keep you from overspending during the holiday season. Expenses add up, and we’re not just talking about gifts—most people need to account for travel, decorations, and even food (like for holiday parties). And inflation means people are spending more just to keep up.
Review what you spent last year to get an estimate on how much you should set aside and assign a realistic dollar amount to each category. Be honest with yourself—you don’t want to underestimate your spending and run out of funds (or accumulate debt). You should also track your spending as you go, whether you decide to use an app or a spreadsheet.
Pro tip: Include a small “miscellaneous” buffer in your budget for last-minute costs.
2. Start a separate holiday savings fund
Having a separate account for holiday savings is crucial—you won’t be tempted to dip into your savings, and it’ll keep holiday expenses from interfering with your regular bills or emergency fund. You can set up automatic transfers from each paycheck, making it almost effortless to save. It doesn’t need to be much, either—consistent contributions add up over time.
Let’s say you need to set aside $1,500 for your holiday spending. Between January 1st and November 1st, that’s $136 per month. If you get paid bi-weekly, that’s around $68 per paycheck. Wouldn’t you rather set aside that portion each month than stress about how you’re going to afford gifts for everyone?
3. Use rewards points or cash back strategically
You can offset holiday costs by using points or cash back you’ve already earned. Review what rewards you have available from credit cards or loyalty programs to see where you can get the most for your points. You can even stack savings by using cash-back portals or apps when shopping online, like Rakuten.
If you have a Visa Signature®, Visa® Platinum, or Student Visa, you earn Flex Rewards1 points that can be redeemed for gift cards, travel, merchandise, or statement credits.
However, you should avoid overspending just to earn rewards—it cancels out the benefit and will only strain your budget.
4. Set spending expectations with family early
Discussing money with family can be awkward, but it’s a necessary evil before we get into the weeds of the holidays. It’s uncomfortable in the moment, but it’ll prevent financial pressure and misunderstandings in the long run. How to do it?
Have an honest conversation about budgets and gift limits
Be specific about what you can (and can’t) afford and compromise. Maybe that’s foregoing traditional gift giving and opting for Secret Santa instead. Or maybe that’s cutting out gifts altogether and choosing to invest in shared experiences.
Think about functional gifts
If your family insists on giving gifts, consider practical options that’ll be beneficial in the long run. For example, if you have younger kids, their grandparents could open a college savings account. If you have a bookworm in your life, maybe get them a book club subscription.
Share the responsibility
As we get older, we tend to not want as much “stuff.” If you have siblings, splitting the cost of one nice gift for your parents is a great way to cut down on spending while still ensuring they get something meaningful. You can also trade off hosting or traveling with other family members. Did you and the kids pack up to visit your sister across town (or even across the country)? Let her brave the holiday travel this year while you brave Costco the week of Christmas.
Pro tip: Bring up the topic early before shopping starts—that way it’s easier to align expectations.
5. Shop early to take advantage of deals
Early shoppers often get better prices and avoid last-minute stress. Keep an eye on pre-Black Friday deals or early-season sales to snag those big-ticket items at a discount. Plus, by shopping early, you can spread your purchases over time to make costs more manageable, rather than spending a chunk of change all at once.
Use price-tracking tools or browser extensions like Honey search the web for you and test coupon codes at checkout to get the best deal. They even have a price tracker that lets you save items and will notify you if there’s a price drop.
But don’t give in to the temptation to buy items that aren’t on your list. Early deals often entice people to blow their budget just because they find something that’s discounted.
It’s never too early to start planning
The holiday season doesn’t have to come with a financial hangover. With a solid budget, a little preparation, and smart spending habits, you can enjoy the festivities without overspending or going into debt. Start planning now—your future self will thank you when the new year rolls around.
