How to curb your holiday spending

The holidays are around the corner, and as expected, you will travel and buy gifts. But they are expensive, and they are expected to become more costly due to multiple factors. The pandemic impacted every sector connected to vacations—flights, hotels, restaurants, shops, etc. As a result, consumers are expected to spend more than 20% this Christmas. While there is no need to cut costs significantly, you may want to curb some spending to ensure that you can financially catch up post-break.

Holiday budgeting needs rigorous cost-benefit analysis. Limiting Christmas expenditures isn't easy. According to a CFPB survey, consumers find it challenging to stay within their budget owing to poor spending monitoring. Most consumers pay using debit, credit, and cash, making it difficult to follow them even with monthly or annual reports. The following are some methods through which you can curb your holiday spending.

Be realistic about your holiday budget

Making a budget for holiday gifts can put a lot of pressure on you because of the difficult decisions you have to make over what to cut out and what not. However, it is far better than taking on debts to buy gifts. According to the National Retail Federation, Americans are expected to spend at least $1000 on gifts and other holiday expenses in 2021. European households' average expense for gifts is only 193 euros. Most people will agree that a holiday budgeting is essential for keeping a family together, not only financially but also relationship-wise.

Budgeting for the holidays requires careful consideration of the cost-benefit of the expenditure you are about to make. In order to follow through the budget, you have to adopt some common holiday saving tips.

Setting limits on holiday spending

Budgeting for the holidays will allow you to set limits on purchases and still get to enjoy the festivities without cutting everything cold turkey. This means setting limits on credit card purchases; limiting the number of items you want to buy for gifts; and setting budgetary limits on recreational activities. It will not only help you during the holidays but also support you post-holiday when you need to resume life as normal.

While limiting your holiday spending sounds easy, it is not that simple. According to a Consumer Financial Protection Bureau report, consumers find it difficult to stick to their limited budget due to a lack of easy tracking of expenditure. As most customers pay through a variety of channels (debit, credit cards, and cash), it can get challenging to keep track of them precisely even with monthly or yearly reports. The easiest way to mitigate this would be to simplify budgeting and tracking through setting fixed limits on expenditure, even if the actual spending was less than the budget.

Shop early and savvy

If you have the means, nothing will stop you from shopping. You can still cut down by sticking to some basic disciplines. You can stick to cash if you are more likely to overspend using cards. Granted, this cannot be applied to every purchase (e.g. flights), but you can use cash when you are spending at restaurants and shopping. You can take advantage of sales and deals that will save you a lot of money. With the holidays coming, many shops, restaurants, and flights offer cheaper prices to maximise your vacation and savings. You can shop online. Shopping online can cut costs and time. People do not consider the time and money it takes to shop in person because they do not see the money going away physically. Online shopping is much cheaper, and you may even be lucky enough to get free shipping. Most importantly, shop early. Most businesses start offering deals months before the actual holiday. Buy some gifts early to cut down on stress and avoid shortages.

Make sure your budget covers all holiday expenses - not just gifts

It is likely that you will not only be budgeting for holidays. You will also continue to pay for things that are already mandatory, such as bills. However, do not expect to stick strictly to your budget. Life is unpredictable, and situations may arise that may interrupt your plans. These could be medical expenses, maintenance costs, or you may be fired from your job, which has manifested into reality during this pandemic. It is very important to be prepared for unexpected circumstances and budget to cover everything. Although unpredictable incidents are subject to individuals, there are some basic measures you can take to be prepared:

  • Set aside emergency funds to back you up when conditions become urgent. This money should be liquid and accessible at all times, and it should not be used to cover holiday expenses
  • Check if your insurance covers your trip, your health and your items. Insurance will help you reduce the biggest costs significantly
  • Get help if you need it. There is nothing wrong with asking for help, especially if you have family members who care for you. They can chip in and share the cost of the festivities to give you the much-needed space to restart

Set budgets per person on your shopping list

You can start by setting a fixed amount per person for gifts. The right amount depends on your income and how many people you want to buy gifts for. But a good rule of thumb is to set aside 50 to 100 euros per person for family members and 20 to 50 euros for a friend or colleague. You can not only track your expenses as a result, but you can also find ways to control and lower costs when possible. For instance, you may want to enter a Secret Santa gift exchange to reduce the cost. You can also add an additional 15% on top of the budget to prevent any cash shortages.

Stay on top of your spending

Keep a close eye on your budget: this means starting saving early and continuing to monitor it. It might seem like common sense. However, not everyone stays on top of their holiday expenses. Early saving eliminates a lot of the stress that comes with spending and reimbursement after it. On average, it takes six months to save up for vacation. If you start saving small, at least a year early, you will be able to fulfil the obligations that come with festivities without sacrificing your quality time. If you do not know how much you need for this year's holiday, look at your last year's expenses and calculate the amount you need to set aside every month to reach that goal. Observe where all the money was spent and allocate the money accordingly. After creating your holiday budget, check your financial statements, pay all the necessary bills, and use online banking to keep tabs on all your accounts.

Avoid debts

It may be tempting to use your credit cards to pay for some of the costs. But note that they are not necessary items that you need to spend for. Credit cards should only be the last resort for an emergency, not to be used for vacation-related expenses. Therefore, acquiring debt for holidays will result in far more serious repercussions that you might not recover from. If you have the cash to pay for it, better to pay without incurring interests.

If you do not have available cash and must get the item, check for low-interest instalment payment opportunities. Instalments can be a financial lifesaver, especially if you make a big purchase (like electronics). Although undertaking instalments is still undertaking debt, credit card interest rates are much higher than the interest offered under instalments. Interest rates for instalments are fixed and have a specific schedule to pay, allowing you to easily get the debt under control. They may also offer tax benefits, depending on what you are buying.


Gifts are a big part of any Christmas shopping budget, but there are other things to consider, such as commuting and lodging. Early is the right time to rev up your motivation if you want to get ahead on holiday shopping. Waiting until the last minute to buy Christmas presents is a bad idea. Avoid overspending over the holidays. Take a hard look at your family's financial standing and see how much cash you'll have to cope with in the new year. If your budget is tight, try crafting some items, regifting leftover gift cards, or reducing your buying list. Finding a balance between what you need and can afford is the first step to saving money. No one sets out to accrue debt on purpose, and it is quite possible to learn how to live a debt-free life.

Holidays are stressful. It brings multiple things into one place, which can be overwhelming for many people. Finances, family dynamics and post-festive recuperation can cause anxiety. But it need not be so daunting. Preparation is the key to a stress-free vacation. Having a plan that incorporates your well-being is the best way to ensure that everyone will have a good time.

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