Do's and Dont's of Holiday Budgeting

Back to Blog

The holidays are right around the corner. If you haven’t started your holiday shopping, it is not too late. While shopping for the holidays can be fun, it is also a time of year that budgets are stretched thin – and overspending often occurs. This year, the National Retail Foundation predicts that consumers will spend an average $832.84 of per person. To help you effectively plan and save money on your holiday shopping, we have put together a Naughty or Nice list to protect you from overspending.


The Naughty List

Let’s first address what to avoid while you are filling your shopping cart with gifts this season.

Be Cautious of Maxing Out Credit Cards

Using credit cards during the holidays helps with rewards like cashback, but when you max out these cards this can hurt your credit score and increase your minimum balance payment. Remember just because you have a large amount of credit capacity on the card, doesn’t mean you want to max it out.

Don’t Buy to Impress

Sometimes we have that special someone we want to impress and buy lavish gifts for. But try not to go overboard just to impress someone. Most people would rather receive a thoughtful gift than one that you had to max out your credit card to afford.

Avoid Last Minute Shopping

Rushing to find everything on your list at the last-minute can become stressful, especially if these items are out of stock. This can cause you to purchase more expensive substitutes. Next year, start shopping in October. This gives you plenty of time to look for gifts and budget what you can spend.

Don’t Ignore Your Finances Until the New Year

The holiday season is busy, and can become an easy time to push the thought of finances out of your mind. Rather than ignoring your credit limits or account balances until the holidays are over, monitor your spending to ensure you are starting the New Year off with a firm grasp on your finances.

Shipping Can Cost

An easy way to go over budget is by not considering the cost of taxes or shipping. While a few extra dollars per gift may not seem like much, shipping costs can add up quickly if you are buying for multiple people. To avoid breaking your budget, ensure you are factoring the shipping and tax costs into your total purchase price.


The Nice List

Now that you know what not to do while shopping this holiday season, the following are some additional tips to help you save!

Compare Prices

Many stores, like Target and Walmart, offer a Holiday Price Match Guarantee. If the price of an item you bought during a specified period is lowered in their store or online after you made the purchase, they will retroactively match the lower price.

Create a Holiday Budget and Stick to It

Creating a budget before you begin any shopping is key to not overspending during the holidays. Make a list of those you want to buy for and then evaluate your spending limit for everyone. One way to stay on top of your spending is to use the envelope system. Separate your money into individual envelopes for each person you are going to buy a gift for—this will prevent you from swiping your card too many times and overspending!

Use Apps that Save

There are several apps and Internet browser downloads that offer additional savings in the form of coupon codes, cash back or both. Most even do the work behind the scenes for you, so why not take advantage of the money saved?

  • Rakuten – a digital coupon and cashback app that offers up to 20% off select purchases with over 3,500 retailers.
  • Honey – a smart shopping assistant that will automatically search and apply discount codes or coupons to your cart. Long gone are the days of having to manually search for coupon codes!
  • Ibotta – offers up to 30% cash back every time you shop online, on the app, or in-store.

Maximize Credit Card Offers

We’ve all been there when a store credit card offer is presented at the checkout. “Mr. Smith, you can save $100 by applying for an ABC Store card today.” Utilize retail credit card offers to your advantage to maximize savings. Don’t get carried away and apply for every retail card offered—this will still cause multiple pulls to your credit, which will negatively impact your credit score. Use this method responsibly and be sure to always pay your statement balance with the cash budgeted for gift giving to avoid paying additional in interest.

Give Cash or Gift Cards

Sometimes we just don’t know what to get someone! Rather than searching the store or internet for the perfect gift, consider giving cash or a gift card. This not only allows you to stick exactly to your specified budget, but it gives the recipient flexibility when spending the money.

You may also like:

New Year’s Budget Tips
Shop Small & Stay on Budget This Holiday Season
How to Budget with the 50/30/20 Rule