It's the most wonderful time of the year...except for perhaps your bank account. Unless you've been prudent about saving for the holiday all year, mounting expenses can quickly take a toll. In fact, about 30% of Americans found they overspent during the last holiday season.
Fortunately, there are ways to save money during the holidays and not feel like Scrooge. Continue reading for 14 tips to help you celebrate the season without breaking the bank.
1. Create a budget
This should always be your first step in saving money for the holidays—figuring out how much you can afford to spend. If you're not sure where to start, review last year's holiday expenses as a guide to a realistic budget, keeping an eye on spending categories where you can cut back this year.
Remember that while holiday gifts may make up the largest part of your budget, you need to focus on non-gift costs too, so consider all those unexpected expenses that are easy to overlook: gift wrap, décor, larger grocery bills that come with hosting family and extra fuel for holiday visits, to name a few.
If the budget isn't balancing, figure out where you can pare back now before you start spending. You also should peruse your usual budget to find ways to amass more holiday savings. Identify what you can forgo (like dining out) or pause (such as subscriptions or regular pedicures) to help boost your savings for the holiday. While these spending shifts could be temporary as you augment your seasonal budget, you may discover you didn't miss those little luxuries and decide to permanently redirect that money to your savings account.
2. Make a gift list
And, yes, check it twice. The key to not overbuying (or wasting precious time) is all about a carefully crafted gift list. Your gift guide should include the name of the person, proposed gift ideas and a ballpark price that keeps your budget in mind. At this point, you may decide to trim your list or make other arrangements.
Then, embrace savings. A common misstep some shoppers make is overcompensating when buying something on sale. Say you have decided to spend $50 on your mom, but you find a sweater she would love on sale for $25. Many shoppers would then buy two or buy another item to make up for the difference. Instead, realize you've found her exactly what she wants, so stop there and congratulate yourself on a great deal. The extra $25 can be reallocated to another gift that costs more than expected, or better yet, stashed in your savings account.
Use an app like Christmas Gift List Tracker or GiftPlanner to keep your list at your fingertips whenever you find that perfect present.
3. Track your holiday spending
Some Santas swear by paying cash, and that can be a smart strategy to avoid overspending, especially if you allocate a certain amount to each gift. But you don't want to give up the rewards you earn by using a cash-back, no-fee credit card for your holiday purchases. Track your credit card spending as carefully as you would cash and make sure you have a strategy for paying it off in full. You don't want to still be paying for the holidays when Valentine's Day rolls around.
A budgeting app can keep you organized: Check out some top suggestions here. This budget record can also become a template to see where you spent and inspire you to jump start saving for the holiday next year.
4. Take advantage of retailer incentives
Holiday savings can be easy to come by if you pay attention. Sign up for your favorite retailers' email blasts and text notices and follow their social media profiles to stay apprised of holiday promotions and flash sales. You also can use an app or browser plug-in to track pricing and let you know if a price falls or if there's a better price on another site. PriceBlink and the Camelizer are two to try.
Many local merchants might be having special events on Small Business Saturday, with discounted items or perks like complimentary gift wrap. Whenever possible, shop where you can earn additional loyalty points to use later. For example, most people would love to receive movie tickets as a gift, and you might end up with a free movie ticket or two for yourself.
5. Buy gift cards carefully
Gift cards are a perennial favorite for those hard-to-buy-for people on your list. And while they are universally adored, they can also add up quickly. Buy them strategically through a site like Raise or CardCash that sells cards for face value at a discounted price. You can also explore electronic gift card options on GiftNow. Warehouse stores also often offer discounted gift cards you can pick up while you're doing your regular stock-up. You can give these bargain cards to others or use them for your own shopping.
6. Use your own gift cards
Quick: Take a look through your purse, wallet, car glovebox or drawers. Chances are you have a long-forgotten gift card in there. Now is the time to put them to use either to buy a gift for someone else or to defray costs for your own holiday wardrobe or other needs.
You also can regift a card that still has funds. Just check the balance to ensure it's not been partially used. You can even ask the sales associate to issue you a new one so it doesn't look worn.
7. Make holiday purchases with points or rewards
For extra holiday savings, trade in the rewards points, discounts or coupons accumulated in a brand's loyalty program. Or redeem the cash back on your credit card to apply to your holiday expenses. It allows you to buy someone exactly what they want without putting a dent in your budget. For instance, the Synchrony Premier World Mastercard®offers 2% cash back on all your purchases and doesn't have an annual fee.*
8. Search for free shipping
Oh, the frustration of finding an item at a great price, only to be hit with a sky-high shipping fee as you check out! Fortunately, most retailers know costly shipping is a major cause of cart abandonment and typically offer free shipping in different ways.
Often there's a certain purchase threshold, but you don't want to waste money to reach it. Instead, bundle purchases. Your aunt, neighbor and kid's teacher will never know you bought them the same item from the same store.
Many stores that don't typically offer free shipping participate in “National Free Shipping Day in December. Check the list of participating stores and time your purchase if applicable.
If an e-commerce site has a physical outlet, you can use a buy online and pick up curbside option to avoid a delivery fee.
9. Be cognizant of gift returns
In the quest for holiday savings, you sometimes might buy an item on a whim or misread product specifications on a website and later realize the purchase is not as intended. Returns are often a hassle so it's easy to put them off, but it could be costing you big bucks. That's because many retailers have shortened their return window, which could negate your holiday savings by leaving you with an item you no longer want or need.
To avoid being stuck with merchandise you can't use, note the return date and keep the receipt and all the packaging for the best chance of a full refund. If you must accept store credit, track it carefully and use it as soon as possible—preferably on another gift this season.
10. Regift with caution
We've all opened something that was clearly re-gifted. After all, you're not quite the cat mug type. Yet if you've received a high-quality item that's not for you, letting it go to waste seems…well, wasteful. Regifting can be approved on one condition: If you receive something you know you won't use but that you know the recipient will. (So, cat mugs to cat lovers only.)
The test is whether you would actually spend money on that item for them. If so, you're good to cross that person off your list and regift away. Check there are no identifying marks remaining, and they don't know the person who initially gave it to you.
11. Get creative with kid's gifts
Plans to save for the holidays can go out the window when your child requests something trendy. Yet, sometimes what they really want is one big item, and if it's within your budget and values, it can be the right choice. But if your child has their heart set on a wish that's in high demand, buy it as soon as you can to avoid disappointment. Many retailers are reluctant to discount their hottest items so you might not get a deal but think creatively about other ways you can save, like applying reward points to bring the cost down.
As you're shopping, remember that more isn't better and can lead to overload and even sibling squabbles. Try the "five gift rule:" Buying something they want, something they need, something to wear and something to read, with the fifth as a fun surprise.
You also could focus on buying experiences rather than things to make the magic of the holidays last far after the "day."
12. Consider alternatives to traditional gifts
Quite likely the last thing many of your friends and families likely need is more “stuff" so start thinking creatively. You can give gifts of time, like cooking dinner for a busy family, running dreaded errands or committing to a regular coffee date.
Or consider a group gift membership to a local attraction for your nieces and nephews. An experience gift can be out of season too: For instance, look ahead to a spring art festival or summer visit to an amusement park. Spreading activities out gives everyone something to look forward to and also spreads out your outlay. Put the money aside in a high-yield savings account where it can earn interest, and then you can spring for the dinner along with the movie.
Another option is a gift that requires more thought than money. Today, it's easier than ever to track down obscure items, like a souvenir from a relative's hometown or a piece of memorabilia from the band that played at your brother's first rock concert.
13. Donate to a charity in peoples' names as a gift
Did your friend's dad undergo cancer treatments? Does your sister have a soft spot for animals? Making a donation in the recipient's name is a thoughtful way to honor their favorite charity during the holidays. The trick here is to give to a worthy cause that's important to them, not just you. Otherwise, the recipient might feel there is a hidden agenda at play.
Consider making the transaction on November 29, 2022, which is known as “Giving Tuesday." Philanthropies will be ramping up their marketing around then to give you more insight into how the gift will be used. And finalizing your contribution before December 31, 2022, means your donation may help you qualify for a charitable tax crediton your 2022 tax return.
Since there are so many nonprofits, do some homework by reading up at a site like CharityNavigator.org to verify the one you're considering is legitimate.
14. Don't forget yourself—but set limits
One of the top holiday budget busters is buying for yourself. If you know you'll be tempted during all this shopping, build a few personal items into your budget so you're not thrown off. Or better yet think about the gifts that might be coming your way and vow to resist the urge to spend. That amount you budgeted can go right back into your savings account—or into a CD for potentially even more competitive interest rates.
The bottom line
Ideally, you've been saving for the holiday throughout the year since it's challenging for a budget to flex enough to cover these extra expenses. But if not, consider it a reminder to save for holiday shopping in the coming year.
To make saving a habit, consider creating an automatic savings plan, whereby you regularly allocate a set amount of money to a dedicated account. A good option is to open a high-yield savings or money market account, as competitive interest rates can bolster your deposits.
LEARN MORE: How to Spend Wisely on Charitable Giving
* 2% CASHBACK: Valid on net purchases (less credits, returns and adjustments) of goods and services made with your Synchrony Mastercard. Cash back earned will be applied as a statement credit within 2 billing periods after an eligible purchase is made. See Reward Terms for details. NO ANNUAL FEE: For new accounts the Variable Purchase APR will be 16.24%, 22.24% or 29.24%. The APRs are accurate as of October 1, 2022 and will vary with the market based on the Prime Rate (as defined in your credit card agreement). Minimum interest charge is $2.00.
