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Protecting your budget around the holidays

By Kate Rockwood


Even if you’re pretty good at watching your pennies, the holidays can still put a lot of stress on your budget. It’s not just the cost of gifts, but also extra goodies at the grocery store, travel expenses, and even cards and stamps. 


The average person spends about $1,050 a year on holiday-related expenses and that doesn’t include any interest you might have to pay on your credit card bill. The good news is that there are ways to not just stay within your holiday spending goals, but also spend a little less than usual, all while enjoying the festivities of the season. 


Here are 6 ways to keep from busting your holiday budget. 

1. Set a budget and track expenses

You can’t stick to a budget if you don’t have one in the first place. Rather than just keeping it all in your head, take the time to actually write down how much you can afford to spend on the holidays that year. You can create a simple paper budget, use a free budget app like Mint or EveryDollar, or download a budget worksheet. Write down how much you can spend in categories like gifts, food, travel, outings, and even smaller things like wrapping paper and stamps. 


Once you have a budget, track every purchase you make. Tracking is the best way to make sure you’re sticking to your budget and allows you to see where you might be overspending and make changes. If you notice you went $20 over budget on Grandma’s gift, cut back in another area.

2. Pay with cash

If you can afford to pay off your holiday expenses with cash only, that’s a great way to stick to your budget. It’s harder to part with physical cash than to swipe a credit card. Plus, you won’t have to worry about the added interest costs if you don't pay off your entire credit card bill on time. If you have the cash upfront, you can use the envelope system—keeping a set amount of cash in envelopes marked with spending categories—to easily see how well you’re sticking to your budget. 

3. Get creative with gift giving

With the financial uncertainty caused by the coronavirus, this might be the year to reconsider your gift giving list. Can you introduce a Secret Santa system with your extended family where everyone draws a name or two out of a hat? Or maybe turn your annual gift exchange with friends into cookie or recipe exchange instead? After all, it isn’t getting gifts that people like best about the holidays. Sixty-nine percent of adults named time spent with family and friends as their favorite part about the holiday season, according to a Pew Research study


If you’re a creative type, use your skills to make a scrapbook in someone’s honor or to create a decorated binder filled with cherished family recipes. A one-of-a-kind homemade gift is something people will always remember. (For homemade gift ideas, try these.)

4. Use digital coupons

The internet can be a powerful tool to help you save money. There are several easy-to-use browser extensions that will hunt for online coupons (Honey), do comparison shopping for something you’re looking to buy (Pricescout), tell you the best time of year to buy something at the best price (The Camelizer), or find the best deals on airline flights, hotels, and rental cars (Invisible Hand). Not only can they save you money, they can save you time, too.

5. Don’t forget about shipping 

If you do a lot of online shopping or need to mail gifts or goodies, shipping can quickly eat into your holiday budget. This year, shipping may be especially expensive due to the coronavirus. To avoid hefty shipping charges, buy gifts on days like Cyber Monday (the Monday after Thanksgiving) when many companies offer free shipping or use sites like Free Shipping Day to find free-shipping coupons. And whenever possible, mail or order your gifts early so you don’t get stuck paying higher fees to have them shipped in time.

6. Plan for next year 


Although some big sales happen around Thanksgiving and Christmas, you can find even better deals when stores drop their prices after the holidays. Cold-weather items like winter coats and snow boots are also cheaper in July than November so shopping off-season can save you some money. It’s also easier to stick to a holiday budget when you have 365 days to prepare. Instead of trying to scrape together cash at the end of the year, or putting everything on a credit card, budget for holiday spending year-round. Figure out your usual holiday expenses each year, divide by 12, and then set aside that amount each month so you have what you need when it comes to spend it.


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