November 04, 2024

Budgeting Tips for the Holiday Season

couple looking at iPad

January is the busiest time of year for budgeting. The aftermath of the holiday season leaves people questioning their decisions as they get their credit card bills: “We spent how much?!” That’s when they seek help to figure out how to pay off the debt and set resolutions to have a financially sound new year.


Instead of scrambling for gifts at the last minute and overspending, you can commit to enjoying the holidays while staying on top of your finances. Here are my best tips to help you buy gifts for your loved ones without overspending.

1. Determine how much to spend during the holidays.

A common rule of thumb is to spend 1% of your household income on holiday gifts. However, many families spend multiples more during the holiday season. You can use the 1% rule, or you can use the following tactics to pinpoint the appropriate range.

Start by saying the number out loud. “We’re going to spend (insert number) on the holidays this year.” Begin with a low number, then go higher until you start to feel uncomfortable. Pick the number that sounds right to you.

Next, ask yourself the following questions:

  1. Can we spend this amount without being in a worse financial position in January?
  2. If I had to pay for everything in full instead of monthly payment plans, would I still spend that amount?
  3. For every dollar I spend on gifts, would I give an equal amount to charity?

If you say, “Yes,” to each of these questions, you’re good to go.

2. Create your holiday budget.

Now that you have your number to spend in mind, I recommend creating a spreadsheet to get everything in one place. You’d be amazed at how a little planning can go a long way.

Here’s what to include:

  1. The people for whom you will buy gifts. Family members come to mind pretty quickly. But don’t forget about gifts for teachers, work friends and people who provide services to you like the trash collectors, your mail carrier, house cleaners and others.
  2. Your research on gifts and costs. Create a column in the spreadsheet for links to the items you plan to purchase. If you normally shop from your phone, keep the tabs for those items open, then add the links to the spreadsheet when you’re in front of a computer.
  3. The prices of each item. Keep a running total of all items you plan to buy. This will ensure that you know how much you will be spending before you make any purchases.
  4. Your other holiday expenses. Are you hosting a dinner, doing a Secret Santa or gift swap, or purchasing any decorations? It all counts toward your holiday budget.

3. Figure out how to reduce your holiday budget.

I’m guessing the number you have in the spreadsheet is higher than you thought it would be. The good news is that you haven’t bought anything yet. You’re still in planning mode.

So, what can you do to reduce that amount?

  1. Reduce the number of gifts for family members. Remember that you’re probably not the only one giving them gifts, so cut back on one or two gifts per person. Think quality over quantity.
  2. Agree to gifts for kids only. If you and your siblings buy gifts for each other, reach out to them and float the idea of giving gifts to kids only. They have probably been thinking about it, too.
  3. Go in with others on big-ticket purchases. Look at the expensive gifts on your list and see if a friend or family member wants to go in on it.
  4. Buy used or refurbished. Honestly, I’m not sure why so many people don’t do this. Our family buys many of our electronics used or refurbished, and it saves a ton of money. Amazon & eBay are great for this sort of thing.
  5. Don’t get swept up by the big deals. A deal isn’t a deal if you end up spending money on something you wouldn’t have bought in the first place. A discount of 20% still means you’re paying 80% for something unnecessary. Turn it around. Look at how much you’re spending, not how much you’re saving. Only shop for a deal if you were going to get that item anyway.
  6. Use your gift card stockpile. They’re lurking in your drawers and cabinets and have been sitting there for a while now. Use them up. This will reduce your actual cash outlay and help you declutter.
  7. Use credit card rewards and points. Similar to gift cards, why are you hoarding all of those points? Use them up!
  8. Edit your gift choices and return items before you gift them. Look at the final haul before you wrap them. Is there anything at all that the gift receiver won’t miss? Return it before the holidays to get that refund back on your card.

Now that you have set your holiday budget, planned out your gifts, and know how much you will spend once everything is purchased, you’re ahead of the game. Budgeting for the holiday season doesn’t have to break your bank. Plan ahead, so you can enjoy your holiday and be on solid financial footing in the new year!

If you’re looking for a team who has already done the research, worked with hundreds of families, and has the tools to help you be successful, then Family Budget Services is here to help. Not only will we help you set your numbers, but the process is also structured to help align your spending goals with family members, figure out how to overcome your biggest budgeting challenges, and add a layer of accountability to make sure you stick to it.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. Please be advised that Buckingham only shares video and content through our website, Facebook, LinkedIn page, and other official sources. We do not post investment advice on WhatsApp, Telegram, other interactive applications, or other similar platforms. Rather, Buckingham provides investment advice only through individualized interactions. R-24-7828

About the Author

Rob Bertman

Director of Family Budget Services

Rob helps busy families save more and argue less so that they can confidently accelerate toward their financial goals while maintaining the lifestyle they love. Through a collaborative process, he helps clients design a simple and flexible budgeting system while providing the support and accountability they need to make this happen.

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