Keep holiday spirits high with these practical money tips.
Holiday season has arrived, and with this traditional gift-giving time comes the risk that all of your Fa La La La fun can lead to Fa La La La AHHHH’s due to inadvertent overspending in the name of tidings of comfort and joy.
Anxiety around finances can dampen the holiday spirit faster than the Grinch, with 8 in 10 Americans saying the expectations and events around the holidays cause them to feel increased stress.
And while we make a point to discuss the importance of budgeting year-round, managing finances during the holiday season can be even more important.
In this article, we’ll provide practical tips and strategies to help you spend wisely and save money so you can preserve the holiday spirit.
Setting A Gift Budget
“If you fail to plan, you are planning to fail!” Those gloomy words from the normally jolly Ben Franklin ring especially true at holiday time. Shoppers around the country say they are planning to spend an average of $793 for gifts. While this is down from prior years, it can still represent a significant portion of discretionary income for individuals and families, so having a plan is even more important.
Setting a budget for gifts is a crucial step in avoiding overspending and maintaining financial stability. Being able to track where you are helps ensure you don’t dip into savings or incur debt, which can have ramifications long after the last of the tinsel has been cleaned from the carpet. As a bonus, budgeting promotes more mindful and intentional gifting - giving added meaning to “it’s the thought that counts.”
Not budgeting can have real consequences, too leading consumers to utilize debt in ways that are less than ideal. Using credit cards without a plan to repay them can lead to high-interest debt which may be more difficult to pay off.
Unplanned spending can create financial strain, affecting your overall well-being and causing stress during a time meant for joy. Sadly, 3 in 5 Americans feel their mental health is negatively impacted by the holidays. In addition, impulsive spending often leads to buyer's remorse, detracting from the pleasure of giving.
Enough of the bah-humbug stuff, let’s shift towards getting your finances on the ‘nice list’ by setting up a budget.
Steps to Create a Holiday Budget
List all the people you plan to buy gifts for.
- Start by making a comprehensive list of everyone you intend to buy gifts for, including family, friends, colleagues, and any other acquaintances. Take a moment to consider if your budget allows for additional gifts to charity programs that provide holiday gifts to those less fortunate than us.
- Just like Santa, once you have your list you’ll want to check it twice to prioritize it if needed. Focus on those who are most important to you and for whom a gift will be most meaningful.
Assign a spending limit for each person.
- Decide how much you can realistically spend in total on gifts. A few years ago, USA Today reported that on average families would be comfortable spending 1.5% of their yearly income on gifts. That may or may not be realistic for you and there is no shame in spending less.
- Allocate specific amounts to each person on your list based on your relationship and what you feel is appropriate. This may take a few rounds to make the numbers work, but focus your attention on mindful gift-giving.
- Ensure the total amount fits within your overall holiday budget. Overspending even just a little can open the floodgates for less than responsible spending, which may haunt you longer than the ghost of Christmas past.
Use budgeting tools and apps to keep track of your spending.
- These tools can help you monitor your spending in real time, track your progress, and adjust as needed to stay on target. Whether you use a simple spreadsheet program or any one of the fancy apps available for your smartphone, having a system in place to keep you honest and on track will pay dividends in the long run. We recommend exploring the complimentary Money Manager tool within your First Bank Mobile & Online Banking.
Stick to Your Budget
- Remember, the best budget is meaningless if you don’t abide by it. Regular check-ins are vital to your success this season. Regularly review your spending and compare it against your budget. Adjust if necessary to ensure you remain on track.
- Resist impulse buys by sticking to your planned list and avoiding unnecessary store visits or online browsing.
- Share your budget plans with a trusted friend or family member who can help keep you accountable.
Strategies to stay within your budget.
Start Early
- We all know folks who start their shopping months ahead of time, and there might be something to that. The added time can allow for more thoughtful gift-giving and/or for acquiring handmade or gifts that require shipping without the fear of missing the holiday.
- Stores are overcrowded and stress-inducing in the last few days before the holiday. Avoiding the last-minute rush and higher prices is another great reason to plan far ahead.
Compare Prices
- The internet is your budget’s best friend, and using price comparison websites and apps can stretch your dollars.
- If time allows (see above about starting early), check multiple stores before making a purchase to ensure you are getting the best price.
Use Rewards and Loyalty Programs
- Take advantage of credit card rewards points and store loyalty programs. Many offer special redemption levels around the holidays, offering added discounts and bonuses.
- Resist the urge to spend your points throughout the year in order to relieve the pressure and offset holiday spending.
Avoid Impulse Purchases
- Sticking to your gift list and budget is the best way to avoid impulse purchases. Trust the decisions you made in creating your budget and be okay with walking away from an unplanned purchase.
- If you can’t say "no,” consider adding it to the budget for next year or holding off until you’ve completed all other purchases to see if extra funds remain to cover the additional costs.
Creative Gift-Giving Alternatives
Secret Santa and Gift Exchanges
- Who doesn’t love a good “White Elephant?” These group-focused events can significantly reduce the number of gifts you need to buy while still involving everyone - and often they are hilarious and memorable.
- The most successful swaps have clear rules and spending limits to keep things fun and fair.
Group Gifts
- Collaborating with others to acquire a more significant gift for an individual or family can be more impactful and appreciated.
- Examples include contributing to a family vacation, high-ticket items, or a shared experience.
Gift Cards
- Gift cards can empower the recipient to make a choice on what gift is most meaningful to them in the moment. Even those who we know well may have needs outside of our awareness.
- Stores and sites like Raise or Gift Card Granny offer discounted gift cards which means your dollars can go even farther towards acquiring the ideal gift.
DIY and Handmade Gifts
- Homemade cookies, crafts, photo albums, or knitted items can be thoughtful and budget-friendly.
- Personalized gifts show you put time and effort into creating something special just for the recipient. This level of connection can often help extend your budget while also delivering a truly customized experience.
In Summary
As much as the holiday season is about presents, it is also about being present. The time we spend with our families, friends, and co-workers in celebration of our connections and cultures is an incredible gift on its own.
Gifts and gift-giving are the whipped cream on top of the pie, and setting a budget, being smart about shopping, and getting creative can bring added sweetness to the season.
Stop by any one of our branches to share in the joy of the season. Our team members are happy to offer personalized advice and share with you our budgeting tools and resources so you can make the most of this festive season. For more money-saving ideas, you might also be interested in our blog, 10 Ways to Save More Money in 2025.
On behalf of everyone at First Bank we wish you a joyful and financially sound holiday season.
