Holiday season usually means spending season—here’s how to cut back and still enjoy the festivities.

By Lauren Phillips
Updated December 10, 2019
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The holidays are a time for indulging. You eat all the food, drink all the beverages, and spend all the money—starting a new diet or a new budget during the holidays is a fool’s errand, conventional wisdom implies. Even if you have your personal finance tips down pat and your emergency fund fully funded, your financial savvy and self-control in regards to overspending can take a hit during the holiday season.

That doesn’t mean learning how to save money during the holidays is impossible, though. Doing so might actually be necessary: According to a recent survey from NerdWallet, roughly 48 million Americans are still paying off last year’s holiday debt. Experian’s Holiday Survey 2019 found that 60 percent of people say they spend too much during the holiday season. 63 percent of people say holiday expenses affect their finances negatively, according to Experian’s survey, and two out of three people feel stressed about finances during the season.

So it’s time to make a change. People want to learn how to manage their finances better during the holidays: Experian’s survey found that 84 percent of people say they are motivated to improve their finances this holiday season. Fortunately, learning how to save more money—even during the holidays—is completely possible.

We polled savings experts and financial pros on smart ways to cut back during the holidays without actually cutting back or missing out (too much): You can have your eggnog and drink it, too, so to speak. The key is to plan ahead, which starts now (if you haven’t started already). Who knows: 2020 might be the year of financial independence for you, after all.

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“Cut down on nonessential spending, like additional last-minute trips and eating out, before, during, and after the holidays,” says Shirley Yang, VP of Deposits at Marcus by Goldman Sachs. The earlier you cut back, the less you have to cut back—and if it’s too late to cut back early, limiting your expenditures to holiday-related outings and events can help a lot, too.

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Top holiday expenses include paying for holiday travel, entertaining, and buying gifts, according to a 2018 survey from Marcus by Goldman Sachs. With that in mind, take a look at your calendar for the season and make a holiday budget plan. “Decide what you can realistically afford,” Yang says. Give every occasion a spending limit, and stick with that. That includes gifts for yourself.

“It’s no secret that when you are in the gift-giving mood, you’ll want to purchase few special items for yourself,” says Alice Rodriguez, managing director at JPMorgan Chase & Co. “Set a budget, even to gift yourself.”

This also give you permission to splurge a little: If you only account for gifts for and spending on other people, doing anything for yourself during the holiday season might cause undue stress. Set aside money in your holiday budget for holiday outfits, a haircut, or even a spa treatment—you’ll thank yourself at the end of the season, when you haven’t blown your budget by tacking gifts for yourself on top of the spending you already planned for.

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Some credit cards offer price protection, which can get you some money back if the price goes down after you purchase a gift, while others offer deals (a certain percentage or dollar amount back on a purchase above a certain level, for example) in partnership with major retailers. Every penny counts, and you can save a couple dollars at a time with the trusty credit card you already have.

Another option: “Consider using credit card points toward gift cards or presents for everyone in your list,” Rodriguez says. Depending on your credit card, you can put those points toward travel gift cards, retailer gift cards, and more—and if you don’t have plans to use them, using those instead of your money can save you a lot.

If using your credit card for your holiday spending means racking up a balance you can’t pay off, though, skip it; you don’t want your shopping to get you into debt. Shopping with cash can help prevent overspending (and it’ll definitely keep you out of debt), and if you take this route, you won’t be alone: Experian’s survey found that 66 percent of people plan to pay for gifts with cash this year.

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“Start early to avoid making hasty (and expensive) decisions and avoid higher shipping fees,” Rodriguez says.

Last-minute holiday shopping means missing out on deals and getting stuck with whatever price is currently available—if it’s more than you want to spend, but it’s also a must-get gift, you’re stuck paying that price. Plus, next-day or rush shipping can be incredibly costly, especially for large items.

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If you’re really concerned about overspending during the holidays and struggle with curbing your expenses, consider setting aside a holiday-specific account early in the year (or even the previous year), Yang suggests. Put the amount of money you want to spend in a high-interest savings account or no-penalty CD (Marcus offers both). It will build a little bit in advance of the holidays, and as you withdraw from the account, you’ll be able to see exactly how much you have left for the season. If you hit $0, you’re done spending; anything left over is money back in your pocket.

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“Just because it is on sale, does not mean it’s a deal,” Rodriguez says. If you plan to pick up big-ticket items on Black Friday or Cyber Monday (or during another big sale), research what the typical price is; sometimes, a so-called sale doesn’t offer the sort of deal you’re hoping for, and you might be better off looking at another store or waiting.

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If you’re hosting this year, don’t be afraid to ask for help, Rodriguez says. “Potlucks are a great idea for gatherings, and people can bring their choice of food and drink to help even out the costs.”

Ask one guest to bring wine, and another to make dessert; with any luck, you’ll be able to focus on getting your space prepped. If you have guests with specific tastes or dietary restrictions, you can be sure everyone will have exactly what they want (and are able) to eat, too.

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Some banks (such as Chase) offer an autosave function that transfers a specific dollar amount from checking into savings with every purchase; many savings apps offer the same service. Consider signing up before the holiday season, Rodriguez says, so you can save a little even as you spend. By the end of the holidays, you might be surprised by how much you tucked away.

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If your budget is tight, don’t start looking for ways to spend more than you have. Personal loans, store credit cards, and installment loans all let you stretch your money further, but they can also mean you end up paying more in the end, especially if you miss a payment. Plus, they can encourage you to overspend, which can both get you in debt and create a bad habit.

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