How to Survive the Holidays and Not Go Broke

Remember those childhood days when holidays were all about the magic of celebration? Well, now that we’re adults, we’re painfully aware of all the money it takes to make holidays special.

From Halloween costumes, Equinox Celebrations, Thanksgiving dinners, Hanukkah festivities, Christmas presents to New Year’s Eve events—it can be a slippery slope to spending much more than you can actually afford.

And you’re not the only one that spends more than usual on the holidays; the average American spends at least $1,000 or more on holiday spending, and that number goes up every year.

If you’re serious about achieving financial independence and growing your money, budgeting for the holidays should be near the top of your year-end to-do list these next couple of months.

Don’t get snared

Avoiding holiday debt traps can be hard when credit is so readily available, and everybody seems to be overspending.

holiday spending

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Avoid these traps by following these tips:

Set a Budget

Setting a budget is always the first step to creating a tenable savings strategy when being smart about your finances. 

1. Figure out where you will get the money for holiday spending: a savings or checking account, your next paycheck, a sinking fund or your Acorns savings, credit card, a combination of a few, etc.

2. Make a list of all of your bills, grocery money, and savings account payments, and any other more important expenses you have to prioritize before holiday spending.

3. Make a list of people you need to gift, holiday events that you HAVE to attend, and any other holiday expenses that may come up.

4. Now that you know where the money is, how much you have available to spend, and a ballpark range of what you need to spend it on, you can come up with a number that should be your budget for the holidays. Without a budget, it’s challenging to know when you’re overspending and easy to fall into debt.

Get Real About Credit

Using a credit card to pay for your holiday spending can be a smart way to go if you’re using a credit card with a rewarding points system, only using the recommended 30% of your credit limit (or less!), and paying it off each month.

But swiping your credit card is one of the most expensive forms of borrowing money, and if you’re not mindful, holiday spending can take you years to pay off.

It can be tempting to accept those credit card offers, sign-up bonuses, and increased credit limits as all of those offers increase around the holidays. But relying on credit cards only gives you an illusion that you can afford more, and those gifts and holiday trips will only become a burden as the interest increases.

Cash is King

Dollars and cents may seem outdated, but more and more people find that carrying cash and using it as a primary form of payment can save you thousands in the long run.

They’re calling it a cash diet, and while using a credit or debit card may seem more efficient, planning ahead and only taking the exact amount of money you need when shopping forces you to stick to your budget.

Stick to withdrawing cash from your account and leaving your cards at home when going to a holiday event or gift shopping.  

Ways to Save 

You’re going to have to spend some money here and there throughout the holiday season, but you don’t have to break the bank when buying gifts and participating in other holiday traditions.

Here are some ways to cut costs and control holiday spending.

DIY Gifts

I know that DIY gifts make you think of macaroni necklaces and badly knitted scarves. But there are so many beautiful and easy-to-make handmade gift ideas that the person receiving them will love.

Going to the craft store and grocery store is usually where you will find everything you need for everyone on your list, like:

Slim glass bottles for homemade limoncello that I’ll gift to each of my friends. 

White tote bags and colored string to embroider and decorate for my mom, grandma, and sister (they still use the embroidered phone charger baggies I embroidered with their initials five years ago).

Baking and cooking are another way to gift; take it up a notch by making a pie on a pretty plate and adding the handwritten recipe for keeps.

Go online and Pinterest all of the millions of DIY ideas. (Martha Stewart has the best)

Buy Second Hand

This may also give you the idea that a secondhand present looks like a used t-shirt from a thrift store (although I would personally love that gift). But going to antique stores, vintage stores, and used bookstores is so much cheaper than walking into a Macy’s, and you will find one-of-a-kind items for that special someone.

I’ve been buying books from thriftbooks.com for years and have been paying 60-70% off books in perfect condition.

Check out this beautiful vintage tea set that is more beautiful and affordable than any new one you would find at Target. Maybe it’ll take you longer to go vintage hunting, yet it’ll save you money, and the treasures you discover, you might even want to keep for yourself.

Secret Santa

How do you reduce the number of people you have to buy presents for? Cut out more people in your life? No! Arrange secret Santa’s for all of your friend/family groups!

That way, it doesn’t seem stingy when you only gift one person from your office, one person from your friend group, and one person from your close family. Set a price range and pick the names out of a hat!

Rethink your Wardrobe 

According to a study by Lightbox and reported by the NY Post, Americans will attend an average of 11 events in the holiday months and spend $787.97 on new clothes and accessories. 

That’s a lot of money for “going-out clothes” you may not wear again for a long time. 

Assess your wardrobe and think of new ways to wear your stuff. Or, instead of buying something new, spice up your wardrobe with a bright new eyeliner or affordable piece of jewelry.

If you have to buy something new, think about purchasing versatile pieces you can wear in different ways, like a flattering dress that can be worn six different ways; or a white blouse that can be changed up with a belt or blazer.

Bottom Line

Feeling like you’re going broke during the holidays will only prevent you from finding joy during those special moments.

Creating a budget, being mindful about your spending, and creating a plan will empower you to weather through the holidays debt-free and be ready to continue growing your finances after the New Year.

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