The holiday season can be an expensive one. I've spent thousands of dollars over the years on gifts for family and friends. The worst thing that can happen is that at the end of the holidays, you find yourself broke or, even worse, in debt from your holiday season spending. Here are some tips to avoid the holiday spending hangover before it starts.
Save Up Early
The best place to get started with your holiday gifts to avoid big bills in January is to make sure you can really afford what you are buying. I never spend a dollar on anything I don't have enough cash to cover in the bank already. That stringent policy has helped me avoid ever paying a cent in credit card interest.
If you have trouble with this each year, set up an automatic savings plan with a dedicated holiday savings account. You can put in a small amount each pay period instead of paying all at once. Saving $20 per paycheck will give you about $500 per year in holiday savings. Whatever your gift budget is, divide that by 25 to calculate how much you need to save from each paycheck.
Give the Gift of Experiences
Getting physical gifts is fun, particularly when you are a kid, but sometimes creating memories is far more valuable than more clutter for your home.
Thinking outside the box is a great way to approach this. Cooking classes, day trips, weekend getaways, date nights, concerts, scavenger hunts, a special dinner at home, or an urban exploration day are just a few ideas to get you started. You may find a great deal on a fun idea with Groupon or YipIt as well!
Search for Sales
If you are going to buy physical gifts, don't pay full price! Around the holiday season you can find great specials, discounts, coupons, and deals to save you big on your purchases. If you want to search online, RetailMeNot and Honey are my two favorite coupon and discount sites. Honey gives you discounts right in your browser when shopping online. It can't get any easier than that!
Make a No Gifts Rule
Other than with my immediate family, I have a no gifts policy with all of my friends. Rather than spending a bunch of money on each other, I would rather meet friends for a beer at a local pub than spend money on more stuff and clutter. A rule like that is a win-win. It saves both of you money and time shopping for gifts and gives you an extra incentive to have an in-person experience to celebrate the holidays together.
Never Go Into Debt for Gifts
Whatever you do, never ever ever ever go into debt buying holiday gifts. Many people find themselves spending years paying for gifts that gave only a moment of happiness. Instead, focus on doing the best with what you can afford. Your friends and family care much more about sharing great moments and experiences than presents on an arbitrary day of the year. Remember what the holidays are really about and you might find yourself living a richer holiday season regardless of your financial situation.
First published November 21, 2008. Updated December 15, 2014.