How to get through the holidays without breaking the bank

The holiday season is here, which means quality time with family, cozy winter nights and Mariah Carey Christmas classics on repeat. But as adults, the holidays could also mean spending hundreds — and even thousands — of dollars on gifts for your loved ones. 

The National Retail Federation (NRF) expects average consumer spending to reach a record high this year of $902 per person across gifts, food, decorations, and other seasonal items. This number is based on a consumer survey of 8,191 consumers conducted by Prosper Insights & Analytics. The holiday retail forecast from Deloitte anticipates an even higher number of $1,778  (+8% from 2023) based on its survey of more than 4,000 U.S. consumers.

Your budget might be well above or below these two numbers based on your financial situation. Still, it’s helpful to know what the average American plans to spend so you have an idea of what’s “normal” this holiday season. 

If the thought of holiday spending makes your heart race and your palms sweaty, you’re not alone. Here’s how to welcome the new year without putting a dent in your wallet:

Make a list and check it twice

“It's so easy to get ahead of yourself when you're shopping for Christmas,” Aaliyah Kissick, a Gen Z financial expert and CEO of a financial education company, the Financial Literacy Diaries, said. “You don't need an expensive program or fancy app to keep track of your spending. You can get a notecard with each person you're buying for, write the amount you want to spend on the front, and then tally up everything on the back. Make sure to include interest and shipping in your cost as well.”

Start shopping and saving early

Black Friday and Cyber Monday aren’t the only opportunities for big bargains. If you want to avoid the seasonal rush and hectic crowds, strategize your purchases by planning your holiday shopping around other major sales events, like Memorial Day, Amazon Prime Day, Fourth of July, Mother’s Day and St. Patrick’s Day. Spreading out your holiday purchases not only helps you avoid last-minute holiday stress but also the holiday shipping costs that can sometimes be more than the gift itself. 

And if you haven’t already, start saving for the holidays by setting up a sinking fund. A sinking fund is essentially a savings account you put aside for specific future expenses — holiday spending, in this case. To grow your money before the holiday rush, consider parking your sinking fund in high-yield savings accounts that often let you earn up to 5% APY. Just know that some savings accounts may limit you to six monthly withdrawals before you’re hit with fees. 

Leverage cash back and rewards programs 

Many credit cards offer reward programs like cashback, points and miles. These rewards accrue based on your spending patterns and can help you save big during the holidays. According to recent Bank of America data, 40% of consumers say they plan to cover all or part of their holiday shopping by redeeming points or rewards. Here are a few ways you can use your credit card rewards to keep your holiday spending under control: 

• Book your holiday vacation flights, hotels or rental cars with points.
• Apply your cash back as a statement credit to offset your holiday purchases.
• Convert your points into gift cards, which you can use for gift-giving or buying things you need for the holidays. 
• Some credit cards offer experiential rewards, like tickets to events or sports games, which make for unique holiday gifts. 

Know where to shop 

If you're looking for new items with the tags still on, Kissick suggests checking out platforms like ThredUp and Poshmark. These sites are treasure troves for never-worn clothing, accessories and even home goods.

“You never know what you're going to find on the apps. Plus, you could potentially save hundreds if you’re buying holiday gifts for multiple people,” she said. 

Reuse last year’s decorations

As those Santa figurines and mini Christmas trees start appearing in stores, it’s easy to feel tempted to revamp your holiday decor. But before you splurge, take last year’s decorations out of storage and see if you could reuse or repurpose them. There are do-it-yourself tutorials on Pinterest and YouTube that teach you how to redecorate your wreath with other materials or craft new ornaments from what you already have. 

According to Rocket Home’s findings, the average person in the U.S. spends approximately $269 on decorations each year. By reusing what you already own, you can save that amount and put it toward next year’s holiday budget. 

Be honest about your financial situation 

If your budget is extra tight this season, don’t feel pressured to rack up crippling credit card debt just to buy gifts. Instead, be upfront about your situation.

“Let your loved ones know you're focusing on financial wellness,” said Casey Brueske, community education development specialist and certified financial counselor at PenAir Credit Union. “And don’t be afraid to suggest alternative ways to celebrate, such as spending quality time together or creating lasting memories through experiences.”