The holidays can be a time when many people throw their careful budgeting habits out the window. Each year, as the holiday obligations keep piling on—a family dinner, an office get-together or gift-giving among friends—it’s difficult to avoid spending cash that we wouldn’t otherwise shell out.
Before you fall into the holiday ritual of overspending, here are some tips that’ll help you stay in line with old traditions without maxing out your credit cards.
Create your budget
The first step in keeping holiday spending in check is to decide the most that you can afford to spend. Gregory Karp, author of The 1-2-3 Money Plan: The Most Important Steps to Saving and Spending Smart, suggests that no more than 1.5% of your gross income should be spent on all holiday items, and that includes gifts, travel, decorations and entertaining. “But if you’re deeply in debt, consider spending much less,” Karp says.
Track your spending
Once you’ve established how much you’re going to spend, stick to it. Diligently track your spending via a system you can easily follow and maintain. Tracey McBride, author of Frugal Luxuries by the Seasons: Celebrate the Holidays With Elegance and Simplicity—on Any Income, suggests designating an envelope for each person or event on your holiday list. Write the name of the person or event on the outside, then put the exact cash amount you wish to spend inside it.
“When I do my holiday gift shopping, I take the envelopes—no credit cards—and spend only what I’ve budgeted,” McBride says. “Keep these in a safe, hard-to-get-to compartment of your purse or in your front pocket.”
Another option: Download a free or inexpensive gift-tracking app on your smartphone. You can create an overall budget as well as set limits for individual gift recipients.
Seek out great deals
Sometimes saving cash around the holidays is all about good timing. A little-known shopping tip is that if you visit a store after 6 p.m. the day before an advertised sale, you have a good chance of getting those discounted prices before anyone else, Karp says. Many retailers program their registers the evening prior to a big sale, he adds, meaning that consumers often can get these sale prices before they’re even posted throughout the store.
Avoid impulse buys
Shopping online also may keep your spending under control. “Research shows that the sights, sounds and smells of a retail store can entice us to spend impulsively,” Karp says. “Shopping online for holiday gifts can keep you on task and allow you to avoid temptations.”
Cut down on greeting-card costs
Another huge holiday expense that seems to grow each year is the tradition of mailing out greeting cards to friends, family members and associates. Karp suggests purchasing boxed holiday cards at your local dollar store or warehouse club. For those who won’t be offended by not receiving a physical card, consider sending a holiday e-card. Make them personal by attaching a few digital family photographs.
Decorate on a dime
Holiday decorating is another area where you can get creative on a tight budget, says Kris Koederitz Melcher, author of Chick Living: Frugal and Fabulous. “You don’t have to spend much on quality greenery, gorgeous ribbon, garland, and small holiday accents and ornaments,” she says. “Craft and discount stores often have great deals on these. The same goes for simple glass votives and tea lights—which you can use year-round—and these things can be the basis of holiday decorating for years to come.”
Adjust your party expectations
The pressure is on during the holidays to attend numerous types of parties and social gatherings. If your friends plan to get together to exchange gifts, try doing a random gift exchange where you draw names from a hat and buy for only the person whose name you pulled, suggests Adam Leone, financial adviser with Modera Wealth Management in Westwood, N.J.
If you’re hosting a party, avoid the temptation to overspend on alcohol. “If you focus on a few unique cocktails, you can keep your guests happy,” Leone says.
You also could have a cocktail party with finger foods instead of serving a full dinner. Holiday wine-and-cheese parties are memorable, and they’re even kinder on your wallet if each guest contributes a bottle for the party, Melcher says.