Holiday Spending Guide: How to Save Money and Stay Merry

When we get swept up in the excitement of the holiday season, there might be a bit of pressure to buy the "perfect" gifts and the desire to make memories.

Amid the frenzy of shopping, you might find yourself getting stressed and maxing out your bandwidth and credit cards. According to a survey by the American Psychological Association (APA), nearly nine out of 10 U.S. adults say that not having enough money, missing loved ones, and anticipating family conflict can cause stress over the holidays.

The good news is it is possible to strike a balance between spreading the cheer while being smart with your money. And you can enjoy your holidays feeling joy and abundance without breaking the bank. Here, we'll walk you through tips on how to do with our holiday spending guide:

The Holiday Spending Roller Coaster: Why It's So Hard to Get Off

Christmas jingles, holiday deals, and made-for-TV movies can make you want to play Santa Claus to everyone you know. We get it. It's really easy to get caught up in the holiday frenzy. In fact, according to a recent Gallup Poll, Americans estimate they'll spend an average of $975 on the holidays this year, up $100 from the year prior.

Want to turn down the amped-up urge to spend? Try shifting your mindset from "more is better" to "meaningful moments."

Physical gifts may incite "oohs" and "ahhs" when they're opened on Christmas Day or during Hanukkah, but let's be honest, some of those presents might end up being found stowed away and forgotten. Instead, focus on memories.

Meaningful moments don't have to be expensive, either. You can create memories and enjoyable experiences that are low-cost–which we'll get into next.

Finding Joy Beyond the Price Tag

If your senses and bank balance are experiencing overload, you can still find joy without spending too much money. Here's how to save money during the holidays:

Simple Traditions That Don't Cost a Dime

Taking a stroll with your loved ones for a neighborhood lights tour, family hot cocoa night, or holiday cookie bake-off are inexpensive ways to have meaningful experiences. You can also commit to volunteering together at a food bank or local charity.

Remember: It's about creating new traditions focusing on connection rather than consumption. To do so, choose an activity and time to partake in the chosen activity. Ask all family members or friends to chime in on their ideas. To shake things up, try different ideas.

Host a Festive Potluck Instead of a Fancy Dinner

Food-centric gatherings don't have to be pricey. You can skip the fancy dinners or holiday bar crawls and turn a holiday meal into a collaborative community event. You can make it fun by getting creative and thinking outside of the box.

Some ideas to consider:

• Themed potlucks like an "ugly sweater brunch" or "cookie swap nights."
• Add an element of play to your potluck with board games or karaoke.
• For those 21 and older: Holiday-themed beer or wine flights: Ask everyone to bring a few inexpensive bottles of wine or a six-pack of beer for everyone to taste test.
• Holiday movie marathon. Get cozy on the couch with your favorite snacks.

The 'Little Splurges' You Won't Regret Spending On

Spending some money is okay, but do your best to stay within your budget. That way, you can avoid a holiday debt hangover.

Invest in Experiences, Not Things

Opt to gift experiences, , like a nice dinner out, vacation, day trip, or local adventure, . Research has found that experiential gifts tend to incite feelings of gratitude compared to material gifts. Additionally, a recent survey reveals that 92% of Americans would prefer an experiential gift over a physical gift. Breaking it down, 51% of folks prefer receiving an experiential gift (i.e., a day outing or escape room adventure) instead of a tangible one, 30% would like an outdoor activity, and 27% would enjoy a visit to the museum.

It doesn't have to be pricey. Ice skating, a local play, a holiday concert, a crafting activity, or an evening hike (if the weather permits) make great gift ideas. Have songbirds in your life? Christmas caroling could make for a festive outing.

It doesn't have to be pricey. Ice skating, a local play, a holiday concert, a crafting activity, or an evening hike (if the weather permits) make great gift ideas. Have songbirds in your life? Christmas caroling could make for a festive outing.

Treat Yourself—Within Reason

While running around for gifts and checking off everyone on your Christmas list, don't forget to treat yourself–within reason. Consider adding a small item or two on sale, and set a limit.
That way, you won't be deprived of yourself and can enjoy goodies that give you joy and boost your overall well-being. It's a balance between self-care purchases and mindful spending.

Embrace the Joy of Giving Without Breaking the Bank

Here are some ways you can cultivate cheer and joy–both within yourself and for others–without breaking the bank.

• Personalize Your Gifts, Even on a Budget
  As they say, it's the thought that counts. Instead of doling out tons of cash on expensive items that could lead you down a deep debt hole, focus on thoughtful gestures. These small acts and gifts during a stressful season can add a burst of cheer.

For example, create custom playlists, handwritten cards, or home-baked treats. You can also volunteer to run an errand or pick up dinner for a busy person in your life.

Don't believe us? Think about those times when someone lending a helping hand or sending you a thoughtful note made you feel. It's the little things in life that can make a big difference.

• Pay It Forward—Ways to Give Back Together
  Sadly, service work, or volunteering, has hit an all-time low in the U.S. Consider organizing a community service outing as a family friend group. Roll up your sleeves and consider volunteering at a soup kitchen, homeless shelter, or food bank. Organize a toy drive in your community to give to those in need.

When you give back, it can feel more rewarding than emptying your pocketbooks. In fact, research has shown that giving can stimulate your reward center (i.e., mesolimbic pathway), which can release endorphins. That can lead to a “helper’s high” that boosts self-esteem, elevates happiness and combats feelings of depression.

Planning for a Financially Fresh New Year

A look forward at your finances for the new year and a little mindfulness can lead to a more peaceful January. Set some time aside to carve out a spending plan to build positive money habits. Look at your spending habits and cash flow from the year prior. To help you track your spending habits, you can check your bank and credit card statements from the last year or data pulled from your app.

Then, see if you can anticipate any changes in income or spending habits for the new year. These can be ballpark estimates; the beauty of a budget is that it's ever-evolving.

When creating a budget, account for spend-heavy months such as back-to-school, summer vacations, and holidays. Drum up ideas ahead of time on how to save during the holidays. Consider setting up a holiday savings account and automating savings, where you stash a certain amount of money on a weekly or monthly basis. For instance, $25 a week adds up to $1,300 a year.

If you've accumulated some debt, create a debt payoff plan to help you pay it off in a timely fashion. Debt reduction strategies include:

• Getting your head around your debt
• Budgeting for debt reduction
• Considering debt payoff strategies such as the snowball method or the avalanche method

Staying on top of your payments and maintaining a low credit card usage ratio can help build your credit score.

Celebrate, Save, and Smile: A Holiday Season Well-Spent

To avoid getting swept up in unhealthy consumerism, it's important to remember the holidays are about togetherness, not things. By looking at ways to focus on meaningful moments, memories, and bonding experiences, we can cherish what really matters—quality time and joy.

With our holiday spending guide, we hope you have found ways to save money and get a jump on preparing financially for the year ahead. Your emotional well-being and pocketbook will thank you.

Frequently Asked Questions (FAQs)

How do I recover from holiday spending?
If you've racked up some credit card debt from the holidays, you can slowly create a debt payoff plan. Consider the avalanche or snowball method, and pay off your debt either in the order of the smallest-to-largest amount or in order of the highest-to-lowest interest rate.

What is the average holiday spending?
According to data from the Gallup Poll, Americans will spend an average of $975 on the holidays this year.

About the author

A personal finance writer for over 8 years, Jackie Lam covers money management, lending, insurance, investing, and banking, and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives, and overcome mental and emotional blocks.

Her work has appeared in publications such as Bankrate, Time's NextAdvisor, CNET, Forbes, Salon.com, and BuzzFeed. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award, and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming, and daydreaming about stickers.

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