You can keep holiday spending in check by sourcing free decorations from Facebook Marketplace, avoiding flights like the plague, and capping your gift budget at 10% of your monthly income.

The holidays are here, and so are the sales!

But let’s be real: No matter how good the sales are, the holidays are just plain expensive.

From buying gifts for everyone you know, to bringing a dish to all the holiday parties, to decorations, to food, to travel costs…

Your wallet may need to take a breather after the holiday season.

But you don’t have to overspend. And in fact, you can enjoy some of the best deals of the year while staying out of debt.

Why having a holiday budget can save your bacon

According to a survey by Deloitte, holiday shoppers will spend an average of $1,455 each. And over 60% of those consumers are living paycheck to paycheck.

That’s a scary combination, particularly now, given that tech companies have shed over 100,000 jobs and interest rates are rising at a historic pace.

With increased interest rates comes an increase in your credit card’s APR — some cards charge over 30% APR if you don’t pay off your balance in full each month. This could cost you an extra $436+ in interest alone if you put the average $1,455 on a credit card and don’t have a plan to pay it off immediately.

So, instead of paying that “holiday tax,” follow these simple tips to make a plan for your holiday spending that doesn’t involve taking out a second mortgage!

7 tips for holiday budget success

Make a list and check it twice

Make a master list of gift recipients and designate a spending cap for each of them. On that list, come up with a few under-budget gift ideas for each person, and as you come across deals and start picking up gifts, record the gift purchased and the actual amount you ended up spending. For example:

NameBudgetActualGift ideasGift purchased
Polly Pocket, Barbie, Play-Doh
$45Nerf gun, basketball, Game BoyNerf gun
Tina$40Roller skates, helmet
Tyler$40Pokemon cards, Pokemon games
Trisha$100$99Hat, shirt, pantsHat

This gives you a realistic understanding of how much you need to budget for gifts, and helps you keep track of everyone you’ve purchased for. Check each person off the list until you’ve completed your shopping, then go pour yourself a mug of hot cocoa for a job well done!

Read more: How to make a budget

Make multiple of the same dish


If you’re like me, you may be joining more than one holiday party this season. Most of these parties are potluck-style, meaning you’ll have to bring a dish to join.

Set aside funds to make your favorite holiday treat for every holiday meal you are participating in (including Christmas Day), and bring the same dish to each gathering. This way you can buy everything in bulk and prep the dish once, saving time and money in the process.

Read more: 23 ways to save money on groceries

Go light on the lights

Lighting up your house like Clark Griswold may seem like a fun idea, but temper your holiday spending by setting a reasonable limit on your decoration shopping. Find deals at dollar stores, pick up Christmas lights online, and maybe just let your neighbors buy the 15 ft blow-up Rudolph this year.

Bonus points if you can get free lights and outdoor decorations from your neighbors or through Facebook Marketplace. Plenty of people are willing to part with their decor for cheap or free, and you can score some great deals without breaking the bank.

Read more: 7 secrets to finding amazing deals on Facebook Marketplace

Drive, don’t fly

While it’s not realistic for everyone to drive to their holiday destination, those who can will save a lot of money by avoiding high-priced holiday flights.

GIF of the muppets in a car


According to Hopper, domestic holiday flight prices have reached a 5-year high, averaging around $463 per ticket. If you have a large family (say, two adults and four kids, like me), this could get very expensive, very fast.

But with gas prices subsiding from their summer highs, you may be able to save a lot by driving instead of flying. And you get to avoid all of the stressed-out travelers, flight delays, and craziness of the airport. Win-win!

Use a coupon app

Most of us are shopping online these days, but you can save even more money by utilizing a digital coupon app. Apps like Honey, Rakuten, or Capital One Shopping can be installed directly in your web browser, and will show you all of the available coupon codes at checkout.

This can save you a chunk of change whenever you shop online, and you may even earn cash back at the same time. If you aren’t using a computer, each of these apps has a mobile app that you can shop through to apply discounts and cash back offers.

Read more: 11 best websites for finding coupons and deals online

Maximize your credit card rewards

Credit card rewards can help take the sting out of shopping for the holidays. Here are a few ways to maximize your points and rewards:

Pay with points. Some retailers allow you to pay with your credit card points when checking out. For example, you can pay with American Express Membership Rewards when checking out at Amazon. This can help you keep more cash in your wallet, and take advantage of unused points you’ve accrued over the year.

Buy gift cards. While paying with points is good, buying gift cards can net you an even better deal. Some credit card rewards programs (such as Chase Ultimate Rewards) allow you to buy gift cards with your points. Occasionally there are deals, too, allowing you to use less points to purchase gift cards with a higher value.

Earn more rewards. Some credit cards offer high rewards and cash back rates in holiday-friendly spending categories. If you’re hosting a big holiday party, you can earn back by buying supplies with one of the best cards for earning on groceries. Other cards, like the Chase Freedom Flex℠, might earn high rates at certain retailers (like Walmart or Amazon) that rotate every few months.

Note: If you are going to use your credit card for the holidays, make sure you already have a plan in place to pay off its balance in full. Otherwise the extra rewards you earn will be dwarfed by interest charges.

Read more: Best rewards credit cards of 2022

Plan for next year (starting now)

GIF of a 'battle plan' poster being unfurled


While it may seem premature to start talking about next holiday season, planning now is actually one of the most effective budget hacks.

The holidays can get expensive, especially with a big family, so saving now will help ensure you have all the money you need before the holidays roll around again.

Start by setting up a “holidays” savings account, and figure out how much you want to pull together for next year. Break it down into an amount that you can automatically transfer into that account each month.

For example, if you want to spend $2,400 next year, you can budget $200/month to transfer into your “Holidays” account. By the time December arrives, you’ll have the full amount ready to go.

As a bonus, if you find gifts throughout the year, you can grab cash from that account to take advantage of off-season deals.

Read more: Why you should start saving for Christmas now

How much to spend on Christmas gifts

The average American will spend about $507 on Christmas gifts this year. But while this is what people spend on average, it doesn’t mean that you should spend $500+ on presents.

In fact, a good rule of thumb is to spend no more than 10% of your monthly income on Christmas gifts. This means that if you make $10,000 per month, you can budget up to $1,000 on Christmas gifts.

Whatever amount you budget for, you will need to split up the amount between all of your intended gift recipients. A good rule of thumb is to spend about $25 to $50 per person, but you may spend more on family members, and less on friends and co-workers.

Read more: Christmas gifts under $50 for every budget

Final thoughts

Christmas is expensive. But you don’t have to bury yourself in debt to enjoy the season.

The most important thing is to have a plan before you start spending, and to commit to that plan, no matter how enticing any sale might be (yes, even BOGO sales at Macy’s).

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About the author

Total Articles: 30
Jacob Wade has been a nationally-recognized personal finance expert for the past 10 years. He has written professionally for The Balance, Investopedia, Money Crashers, LendingTree, Hedge With Crypto, Money Under 30, and other widely-followed sites. As a cryptocurrency enthusiast and investor, Jacob enjoys researching and writing about the latest in crypto and blockchain technology. He’s been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance. Jacob has deep experience in most areas of personal finance, including budgeting, investing, saving money, debt management, and life insurance. He is also an avid credit card rewards enthusiast, having earned over $30,000 in travel rewards since 2012.