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While the holidays may be the last thing on the average middle-class American’s mind right now, they’ll be here sooner than you can say “ho ho ho.”
With tariffs and inflation already stretching many people’s finances, it’s smart to get ahead of holiday spending now through planning and budgeting. Financial experts offered key budget moves to make to keep the holidays financially stress-free.
Review Last Year’s Holiday Spending
The first step to avoiding overspending is getting “brutally honest” about last year’s spending, said Michael Boggiano, managing partner at Wealthcare Financial.
“If your January credit card bill made you cringe, review those numbers now and set a written holiday budget,” he said. Without planning, it’s easy to spend emotionally instead of intentionally.
Set Clear Goals
Annie Ma, head of savings at Oportun, recommended setting spending goals. “Start by setting a clear goal for how much you want to spend overall.” Breaking goals into categories (gifts, food, travel) helps track where money is going so you can adjust early.
Last year, Oportun members who set up a holiday savings plan were more likely to hit their goals, Ma added.
If you prefer a budgeting app to help you do this, Ma suggested looking for three features:
- Goal-setting tools to track categories like gifts and travel
- Real-time tracking to prevent overspending
- Automation so you’re not moving money manually during the busy season
Start as Early as Possible
The earlier you start, the better, Ma advised. Even a few dollars a week saved now can build a cushion before the spending rush. Oportun members save about $100 in the first month after setting a holiday goal — proof that “small, consistent steps can lead to real progress fast,” she said.
Set It and Forget It
Boggiano recommended automating holiday savings. Open a separate high-yield savings account and set weekly or monthly transfers. “Then you have all your holiday spending money in one place,” he said.
Don’t Forget Extra Expenses
Many people budget for gifts but forget the extras, like wrapping paper, shipping costs, party supplies and higher utility bills from hosting.
“If you’re traveling, parking fees and pet-sitting can sneak in too,” Ma said. Looking back at last year’s bank statements can reveal these “forgotten” expenses.
Some top budget categories include:
- Gifts for family, friends, co-workers
- Shipping costs for mailed gifts
- Holiday cards and decorations
- Travel insurance
- Charitable donations
Pay Down Credit Cards Before the Season
If you’re carrying a balance, the interest is already eating away at your spending power, said consumer finance expert Andrea Woroch.
“This could lead to a vicious debt cycle if you go into the holidays with a high balance,” she said. Create a repayment plan to tackle debt before you start charging gifts again.
Don’t Open New Cards Just for the Holidays
Store credit cards or new credit lines might seem tempting, but they can lead to deeper debt and hurt your credit score.
“Instead, come up with low-cost ways to celebrate — host a casual get-together, suggest experiences over gifts or offer homemade or skill-based gifts like baking or photography,” Woroch suggested.
Focus on Meaning, Not Money
Boggiano said one of the best ways to cut spending is to focus on “meaning, not money.” For families on a budget, new traditions like a white elephant gift exchange can make the holidays fun and thoughtful.
Have Honest Conversations
If you’re cutting back, be upfront about it. Boggiano noted that such conversations can reduce stress and even relieve others from feeling pressured to overspend.
“For anyone who is behind financially but wants to still enjoy the holidays, remember that short-term joy can become long-term regret,” he said. Focus on experiences over expenditures.
