Special occasions call for special spending. But we all know it’s really easy to go overboard.
So, going into this holiday season, why not plan ahead?
You can set a realistic holiday budget that doesn’t break the bank – and still leaves your loved ones happy.
Let’s go over some sweet money-saving tips you need for the holiday season to avoid going broke from Christmas shopping.
What’s a reasonable Christmas budget?
First of all, planning ahead allows you to be more liberal with your spending. But if you’re reading this in autumn, what is that “reasonable” amount?
In general, it’s advisable to aim for around 1% of your annual disposable income for holiday spending.
If you have a lot of relatives to cover, this amount may be a bit less than you require. However, with some additional steps (more on that soon), a bit more can be acceptable.
Christmas shouldn’t be a cause for ruining a family’s budget. It’s fine and often fun to spend more than you normally would on it, but the best parts of Christmas can be free!
There are many ways you can avoid going broke this year – let’s take a look.
7 Tips to Avoid Going Broke – Christmas 2024
1. Be frugal where you can.
Certain things you “need” for Christmas can be made up for with alternatives.
Cards and gift wrapping are two areas that should come to mind. Homemade cards will certainly save you a lot of money. But if you’re creative, they can also be much better for the recipients.
Getting thoughtful and creative can help you save money while being more impressive in many ways!
When it comes to gift wrapping, creativity also saves money. An easy option would be newspapers, but that might not be appropriate for all gifts. You can make some other inexpensive (and even attractive) wrappings out of:
- Wallpaper
- Tissue paper
- Paper bags
- Reusable fabrics
- Baskets
If you have the time and inclination, you can save a bundle by coming up with more creative alternatives.
2. Give the things they actually need.
Thoughtful gifts can be better than expensive ones.
The holidays can be a great time to help people in the family as well. Instead of focusing on getting the priciest, most impressive gift, look to getting them things they need but may not prioritize or be able to afford themselves.
This can be as simple as a new pair of shoes or a new frying pan!
No one said Christmas should only be about the kinds of gifts you wouldn’t normally give at any other time.
3. Careful with credit cards.
Credit cards can be used to pay for regular purchases while gaining loyalty rewards, at no extra cost to you. Of course, that’s only possible when you’re careful and deliberate with credit card usage.
The holidays can be a great time to rack up air miles and points. Just remember to set a credit card budget before going on a shopping spree. If you can do so, you can actually end up gaining more than you lose to your credit card company.
To be safe, it’s good to balance rewards with low interest rates. Christmas is a dangerous time, and many people rack up holiday debt that sets them back for a long time.
Cash Back vs Travel Rewards Credit Cards: Which One is Better For You?
4. …Or pay in cash.
Alternatively, if you don’t trust yourself to control your spending on a credit card, a set amount of cash is more likely to work.
This still requires budgeting, but the only difference is that you save enough cash for your holiday spending. Paper money and coins are finite, and because they exist physically in your wallet, it’s impossible to go overboard without making another withdrawal.
It’s simpler for this path to work for one simple reason: once the cash is gone, you stop your holiday shopping.
5. Use apps.
Budgeting and other finance apps offer a convenient way to save.
During high-stress times like the holiday shopping spree, money-saving apps can provide several benefits:
- A clear budget
- Spending alerts when you’re coming close to hitting your maximum spend
- Rewards such as cash-back deals and discounts for shopping online
- Finding discounts
There are general-purpose finance apps you can use, or more specific ones. You can check out our picks in these articles!
The 8 Best Budgeting Apps to Download Now
The 9 Best Cash Back Apps to Save Money
6. Collect coupons.
Coupons are still a great way to expand your holiday budget and get more for less.
You can become a coupon collector easily if you browse online shops often. Just search for coupon codes ahead of time.
Similarly, comb through your mailbox and see if you have any surprises waiting.
7. Naughty or nice lists.
Well, you aren’t exactly playing Santa.
But as Machiavellian as it sounds, there is a financial logic to making an exclusive list of those you will send gifts to.
Some people feel stuck getting presents for others, ‘because they have to.’
But you don’t.
People who avoid going broke every Christmas know how to draw the line.
11 Ways You Can Set Strong Money Boundaries With Your Family
How do I not go broke over the holidays?
As always, the answer is budgeting.
The reason people go broke over the holidays, if we are going to be blunt, is a lack of self-control.
Of course, it’s easy to indulge the people we love and to be generous during the holidays. But financial discipline is still the only answer, as hard (and unexciting) as it is.
The other part of not going broke is planning ahead.
The earlier you start saving, planning, and spending, the less time you will spend in a rush, and the lower the chances of sudden, regrettable spending.
Apart from these major themes, following the seven points listed above can help you save.
You Can Avoid Going Broke This Holiday Season
Holiday spending can be reined in with preparations and good financial habits.
You can take whichever steps help you save enough money to thoroughly enjoy the holidays – and avoid going broke.
Editor’s note: This article was originally published Oct 13, 2022 and has been updated to improve reader experience.
