The holiday season can take a toll on your wallet. In a November 2019 Gallup poll, Americans said they expected to spend an average of $942 on holiday gifts. A record-breaking 37% of respondents said they would spend $1,000 or more.

And the spending doesn’t stop with gifts. The holidays come with a host of other expenses, including food, entertaining, decorations, holiday travel, cards, and charitable giving. Add it all up, and you could easily spend thousands of dollars on your holiday cheer – and start the new year with crushing credit card debt. 

The key to enjoying an affordable holiday season is creating a budget that covers all expenses from gift giving to cooking a meal for all of your family and friends. Sticking to a realistic budget will allow you to make the most of the money you have available and prevent you from overspending. If you prepare ahead of time, you can pay for the holidays in cash and stay on track with your financial goals. 

Here are seven ways to help you stick to your holiday budget this year. 

1. Make a Budget

The first step may sound simple, but the only way to stick to a budget is to actually have one in the first place. Skipping this step is an easy way to find yourself spending more than you intended. Many people either just shoot for a ballpark amount or simply gauge how much they’re spending based on memory. Instead, do a few calculations for a budget based on your monthly expenses to find a more concrete number for your holiday spending. You can even make a budget for each thing or person.

It’s important to write your budget down. Write down how much you are able to spend on each person or party. For each person, set a firm “no more than” purchase price for that gift. A budget is a goal for your money, and you are 1.5 times more likely to achieve a goal if you write it down. Once the budget is in place, you can start planning your holiday.

2. List Expenses

Once you know how much you have to spend, begin by making a list of all of your expected holiday expenses. 

Gifts. List all the people you plan to give presents to this year. In addition to large gifts for friends and family, include all the small gifts you need to buy for social events, such as host and hostess gifts or a secret Santa gift exchange at work. Don’t forget small items like stocking stuffers. If possible, make room in your budget for a couple of extra all-purpose gifts. These come in handy if you receive a last-minute gift from someone who wasn’t on your list or you suddenly remember someone you forgot to include.

Cards and Postage. If you send out holiday cards, photos, letters, or calendars, include a line in your budget for the cost of either buying or printing them, as well as the cost of postage. This category also covers the cost of shipping any gifts that have to reach the recipients by mail.

Food. This category includes food and drinks for your family dinner, any holiday parties you’re throwing, and your contribution to any potlucks you plan to attend. If you’re giving people cookies or other holiday treats, add them to this category as well.

Decorations. Add a line to your list for any holiday decorations you plan to buy. That includes such items as a Christmas tree, outdoor and indoor lights you need to replace, and Hanukkah or Kwanzaa candles.

Clothing. In most cases, you can dress for a holiday party in clothes you already own. However, if you need anything special you don’t have, such as an ugly sweater for a themed party, that’s another item to add to your list.

Travel Expenses. If you’re going somewhere for the holidays, travel costs are another significant expense you need to budget for. If you’re driving, this category includes gas and tolls. If you’re flying, it includes the cost of tickets, baggage fees, and parking at the airport or taking a shuttle. 

After you’ve made your list, check it twice to make sure there are no expenses you’ve overlooked. If possible, add a line to your budget marked “other” to cover any unexpected costs that pop up during the holiday season.

3. Set Priorities

Don’t panic if your list of holiday expenses seems a little long. If there’s no way you can afford to cover every single item with the amount you have to work with, that just means you need to set some priorities.

Go through your list and number the items based on how important they are to you. Assign the number “1” to your top priority, number “2” to the next-highest priority, and so on. Then reorganize your list to put the highest-priority items at the top. 

For example, suppose you decide that giving gifts is your top priority, while new holiday clothes for yourself are a low priority. That means that as you work out your budget, you want to allot more dollars for gifts than for clothes. If necessary, you can even cut out clothing from your budget entirely to make sure you have enough money for gifts. 

4. Shop Smart

If you can’t pare down your gift list, make your dollars go further by shopping strategically. Use price-comparison apps like ShopSavvy to make sure you’re really getting the best price on everything you buy.  Consider doing at least part of your holiday shopping online. Aside from the convenience, it’s easier to compare prices and apply coupon codes to save money. Online browser extensions can help you do both. And because you avoid the hectic holiday atmosphere at the store, you’re less likely to go overboard with spending.

If you think your family members and friends won’t mind, shop secondhand for some of your holiday gifts. At thrift shops and on eBay, you can often find books, CDs, collectibles, and jewelry in great condition for much less than they’d cost new. 

5. Keep Track

Once you begin the holiday season, keep track of all your purchases. Bring your gift list, along with your budget sheet, with you on every shopping trip. Additionally, be sure to keep track of the cost of your holiday-related outings and other expenses so you will be able to more accurately budget next year.

Getting your budget down on paper doesn’t mean your job is over. You still need to keep track of your spending as you shop to make sure you stay within its limits.

There are also several tools to help you keep track of your spending within specific budget categories. One of the simplest is an old-fashioned envelope system, in which you create a physical envelope for each category – like gifts and decorations – and load it up with the appropriate amount of cash. Each time you make a purchase within this category, pull the money out of the envelope. You can physically see and feel how much you have left, so you’ll know when you’re in danger of running out.

You could also consider setting up a separate bank account specifically for holiday spending can help you stay within your overall budget. An online bank account through Chime makes setting everything up quick and easy. Take the total sum you’ve set as your spending limit, put it into this account, and then draw money from that for all your holiday shopping. If you have a mobile banking app on your phone, you can easily check it at any time – even as you wait in line for the cashier – to see how much you have left. 

6. Try to Boost Your Income 

If you need some more money to hit your Christmas budget goal, bring in some extra cash for a couple weeks to boost your spending power. 

You can give your holiday savings a boost – and free up space in your home at the same time – by selling off some unwanted goods for cash. Things like tools, clothes, collectibles, electronics, jewelry, and home goods can fetch a good price on Decluttr, or Craigslist. High-quality clothes can also go to a consignment store that will pay you a portion of their sale price.

Make some money quick by selling things on Facebook Marketplace, Decluttr and OfferUp, or try cashing out rewards from money making apps like Ibotta and Receipt Hog. You could also babysit so parents can go Christmas shopping alone, shovel driveways and sidewalks full of snow, offer gift-wrapping services . . . the sky’s the limit!

Another way to raise extra cash is to cut out little treats you enjoy at other times of year, such as a daily latte or a weekly trip to the movies. Individual drinks or movies don’t cost that much. But after a full month, the savings adds up. Try making your coffee at home, renting your movies online, or cooking at home instead of dining out. 

7. Look For More Affordable Alternatives

For most people, the most special thing about the holidays isn’t the gifts. It’s the unique holiday traditions you share year after year with the people you care about. However, some of these traditions are expensive. To enjoy the holidays more while spending less, focus on traditions that cost little or no money. You can create great memories with inexpensive holiday activities like:

• Taking a tour of your neighborhood to look at Christmas lights
• Watching a movie at home with some hot chocolate
• Sledding
• Doing crafts together
• Decorating the house together
• Baking together as a family
• Reading favorite holiday stories
• Seeing a high school production, such as a play or choir performance
• Caroling
• Eating breakfast together in your pajamas
• Playing games like Scrabble, charades, or Apples to Apples

Once the holidays are over, recheck your budget and see how well you managed to stick to it. If you stayed within your limits in every category, congratulations – you’ve figured out just what works for you. If you went over budget in some categories but stayed within your total spending limit, that’s a sign you need to tweak your budget next year, allocating more money to those particular categories.

Remember, this is the season of giving — not the season of spending, as most merchants would have you believe. Set your expectations and your budget, get creative, don’t overdo it. If you’re looking for more financial tips to help you through the holiday season check out this blog post!