Making the Most of Your Holiday Budget

Holiday money in a jarThe holidays are a wonderful time to celebrate with your loved ones. But unless you manage your festivities and gift-giving carefully, it’s easy to fall victim to the temptation to overspend on presents and cheer. The best way to avoid overindulgence is by doing a little planning so you know how much you have to spend.

Here are some tips:

Set a realistic budget
Keep your overall financial picture in mind when you set your holiday budget. Set a dollar limit for how much you want to spend in total, not only on gifts, but also other categories of expenses such as holiday travel, entertainment, food and drink, and even decorations and wrapping paper.

Add up all the categories, and, if the total is too high, you can tweak your numbers or cut back in areas that are less important to you. For example, you might forgo restaurant meals for a certain time to afford those expensive Star Wars toys. By making choices, you won’t find yourself ringing in the New Year with a new pile of credit card debt.

October is generally the month when Christmas Club account holders can begin to take penalty-free withdrawals in preparation for holiday shopping. These dedicated short-term savings accounts are a tradition that became popular during the Great Depression, and they are a great way to sock a little away each month throughout the year. Credit unions like Hawaiian Tel Federal Credit Union offer free Christmas Savings share accounts that pay the same dividends as regular share accounts.

Try a holiday budgeting app
Use your smartphone to manage your holiday shopping list and keep tabs on your budget. Popular free apps like Santa’s Bag for iPhone, and Christmas Gift List for Android are highly rated by app store users. They provide a handy way to create a gift budget for each person on your list and check off presents as you buy them. They also create an archived record that you’ll be able to refer to next year.


Research prices online
Instead of trudging through the mall or driving to many brick-and-mortar stores, save gas money by shopping online for the gifts you plan to buy. Check for discount codes on savings websites like RetailMeNot and You can often find significant savings on toys, clothing and even holiday food items for parties. For online orders, allow plenty of time for delivery. In previous years, many websites were overburdened with holiday orders, and some deliveries were delayed until after Christmas.

Don’t pay for postage
With the cost of first-class package delivery up over 5% in 2015, sending gifts to friends and family can be more costly than ever. One way around this expense is to take advantage of online shopping websites that offer free shipping. If you have an Amazon Prime membership, you’re also eligible for free shipping.

So if your nephew is dying to get that Munchkin board game for Christmas, make your purchase online and send it to him directly, instead of buying it at the local toy store, gift-wrapping it at home and mailing it at the post office.

For smarter spending around the holidays, refer to your budget often as you make your way through your gift list. If you do splurge on one present, find another area where you can cut back to stay on track. Then you’ll be able to enjoy the holidays without worry.

Jeanne Lee, NerdWallet
© Copyright 2015 NerdWallet, Inc. All Rights Reserved


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