How to Manage Your Finances During the Holidays

Planning and creativity are key to enjoying the season without going into debt

Young women ordering gifts online on a smartphone

The holiday season is fun—until the bills come in January. Hosting parties, buying gifts, and getting plane tickets all add up. The most wonderful time of the year can be very bad news for your wallet. But you don’t have to start the new year in the red. Experts agree that there are a few powerful strategies you can use at this time of year to save cash without compromising your holiday cheer.

You really do need a budget

You may or may not already have a regular monthly budget—and if you don’t, you should. But it’s extra important to have a separate holiday budget. There’s no other way to manage all of those holiday-specific expenses that pop up at this time of year. Without a budget, unplanned spending and generosity can run amok and cause you financial problems that outlast the holiday season. Here are the most important factors you should include in your budget. Use whatever budgeting tool you like to allocate what you can really afford in each of these areas—and stick to it.

Food and drinks

This is especially important if you’re hosting a big party. Chad Chubb, certified financial planner and founder of WealthKeel financial advisors, advises really sticking to your guns in this area. You can get carried away at the grocery store if you haven’t decided in advance what you’ll spend based on what you’re serving at your event. “Knowing ahead and planning accordingly, based on the budget, is important,” Chubb says. In the frenzy of the season, it’s easy to overlook the usual ways to save money, like using coupons, buying things on sale, and sticking to store-brand items. Don’t forget these strategies now!

Justin Harvey, certified financial planner, retirement income certified professional, and founder of Quantifi Planning, suggests giving yourself permission to spend a little more in this area, if it’s important to you. “Meals bring people together, and it’s one of those things that facilitates relationship building.” Just keep in mind that you may need to trim spending in another area.

Transportation tickets

Another potentially expensive part of the holidays can be spending money on traveling to your friends’ and relatives’ places to celebrate with them.

Do a bit of research, Chubb says, including specifics about the different types of transportation you can take to get where you need to go. And don’t forget to plan ahead of time. “You don’t want to buy a last-minute flight,” Chubb says.

Plus, “consider the flexibility of your travel schedule,” Harvey says. If you travel before or after the holidays, “that can be cheaper, that can be less crowded, and that can be less stressful.”


This is definitely an area where people spend more money than they have. According to the National Retail Federation, in 2019, estimated total holiday spending in the U.S. was around $730 billion, with consumers planning to spend an average of $1,048 each.

So the budget really comes into play here. Chubb advises setting price ranges for each type of person (family members, friends, etc.). And to help yourself stick to those limits, use cash to pay for items. If you only bring with you the amount of cash that you’ve set for whomever you’re shopping for, you can’t go over your budget (or at least you’re less likely to).

Harvey has a different approach. There are certain age groups for whom it’s more important to receive material gifts, he says, like children who want a specific toy. Not surprisingly, a study from the University of Leeds in England found that parents feel considerable pressure to get their children what they want for the holidays—in some cases, even taking on debt to do so. However, with adults, Harvey says, there can be less focus on things, since adults are more able to buy themselves what they want throughout the year. “I always encourage my clients and my friends to think more creatively,” he says, suggesting that you buy adults experiences instead. Take someone out to dinner, to see a show, or to do an activity. Harvey notes that these kinds of gifts build memories and improve relationships.

Charitable giving

Giving to charity is another common source of holiday spending. “It’s great if it’s important to you,” Chubb says. “Just make sure you know how much you want to donate, and build it into your budget.”

“Having holiday traditions that are attached to giving to charities can be awesome,” Harvey agrees. But he notes that you can also give back in ways that don’t involve money. Instead, give your time by volunteering somewhere, like at a soup kitchen.

What to do if you’ve gone over your budget

Chubb says it’s always helpful to have an emergency fund. He advises that you put away enough for three to six months’ worth of expenses, or, if you’re still working, three to six months’ worth of income. For the most part, that money is there in case of emergencies, but it’s OK to dip into it to pay back your holiday spending, if necessary. Just keep in mind that you might have to make a few sacrifices afterward, in order to get back on track and build back up the emergency fund, he says.

Bottom line

Plan, plan, plan—that’s what Chubb advises: “Planning ahead as much as possible is key. I’m a financial planner at heart, so it always comes back to planning ahead.”

And Harvey points out that money isn’t everything. Give your time, attention, and love to others. If you don’t have money to give, remember that these are the things that matter most anyway, he says. “Get creative—you don’t need to spend money to create special memories and communicate your love.”