These Holiday Budgeting Tips Can Save You Money

October 26, 2021

Another holiday season amid a shapeshifting pandemic is coming into focus. Thinking optimistically, it’s our second time navigating the holidays with its expected and unprecedented stressors. Yes, there are still many unknowns, but it’s still possible to inject some festive spirit and embrace another strange holiday season. 

To keep your spirits bright, now’s the perfect time to craft a solid budgeting strategy for your holiday shopping. Sticking with simple holiday budgeting tips will allow you to enjoy the wonders of the season while avoiding the stress of end of year debt.

This Season’s Must-Have Item? A Budget

In the past, holiday gifts typically accounted for approximately 25% of annual retail sales. For many people, that translates to a significant amount of debt once January rolls around. By preparing a holiday budget now—and committing to sticking to it—you’ll be better equipped to make it through the holiday season without breaking the bank.

7 Tips for Preparing Your Holiday Budget

Let’s face it. No one looks forward to budgeting, especially when it comes to the holidays. But remember, a budget is simply a plan. Creating a holiday budget can help you sidestep much of the stress and overspending that goes hand in hand with shopping during the holiday season. 

1. Set your spending limit.

Just like a traditional budget, your holiday budget should be limited to the cash you have available after paying all your monthly expenses. If you’re coming up short, you might consider using some of your savings, but be sure to leave extra padding for your emergency fund. It might also be a time to eliminate extras—like paying to have your groceries delivered—at least until the holiday season is over. The goal is to set a limit based on your cash flow without putting too much strain on your overall budget.

2. Create holiday budget categories.

To better track your spending, create categories for all your usual holiday expenses. Your categories could include things such as gifts, wrapping paper, holiday cards (plus stamps), decorations or travel. Dole out your holiday budget among these categories, making sure not to exceed your spending limit. You can still shift amounts around in your categories—just keep it within the budget. For example, if you only spend half of what you’d earmarked for wrapping paper, you can move the remaining amount to another category that may be stretched thin.

3. Make a list of your gift recipients.

Deciding ahead of time who will be on your gift list—and assigning a dollar amount for each of them—is just as important as setting your spending limit. At first, you may feel a little grinchy if you need to leave out a friendly colleague to afford that bike you promised your eldest child, but effective budgeting often comes down to making tough decisions. However, if you’re uncomfortable making cuts, you can always choose to revise your budget to afford smaller items for friends, coworkers, and extended family. It’s your budget, so you get to make the rules. 

4. Save early for large gifts.

Speaking of that bike, if you’ve got pricey items on your list—start saving ASAP. The sooner you start finding ways to save money, the better chance you’ll have of affording those big-ticket items when it’s time to start shopping. 

5. Shop early for the best deals.

It’s never too early to start shopping for holiday gifts. You can compare prices at multiple retailers to find the best deals, sign up to receive emails about upcoming sales, and purchase this year’s hottest item before it’s sold out—or marked way up. 

6. … But don’t get carried away.

Although it’s a good idea to comparison shop for the best prices, avoid the temptation of a shopping spree. While it might sound like a good idea to get as much of your holiday shopping done early, shopping sprees may induce “shopping momentum” and lead to making additional purchases not part of your initial plan. When you’re managing a holiday budget, this is less than ideal. If you have a tendency toward impulse buys, that’s all the more reason to create a holiday budget. 

7. Shop for gifts year-round.

Some savvy shoppers choose to buy gifts throughout the year to avoid the frenzy that comes with last-minute trips to the mall. This strategy offers numerous benefits. For example, you can take advantage of weekly or monthly sales from big retailers like Amazon, Target, and Walmart, which often have deals comparable to yearly sales events (e.g., Black Friday, Cyber Monday). You’ll also be getting a jump on your gift list, which can translate to more cushion in your holiday budget once it’s time to create one. After all, if you purchased a holiday gift for your sister during your beach vacation in June, that’s one less person to worry about when the holiday season approaches. 

Holiday Budgeting on a Shoestring

If your finances have taken a significant hit due to the pandemic, or you’re currently living paycheck to paycheck, it may feel overwhelming to budget for the holidays. But you absolutely can—and should! In fact, the tighter your finances, the more you’ll benefit from a holiday budget. 

1. Rework your budget categories (then do it again).

Once you’ve calculated your spending limit, list out your budgeting categories as you normally would. Then, work and rework your allocations until everything fits. “If you’re working with a super tiny budget, then trying to include everything in your holiday spending plan might not be realistic,” says financial blogger Rebecca Lake. “So, make a second list but this time, only include those expenses that are non-negotiable for your family to enjoy the holidays. For example, you might narrow it down to gifts, food, and one or two activities.”

2. Use budgeting tools & apps.

When planning a budget, the right app can make all the difference. In addition to apps like Mint and You Need a Budget (YNAB), there are now budgeting apps that are specially designed for the holidays. Santa’s Bag, Gift Planner, and Christmas List Snowball can all help you allocate your spending and stay in control of your holiday shopping. 

3. Save on shipping costs.

Search for retailers who offer cheap or free holiday shipping to avoid needless charges on any items you’re having delivered. Also keep an eye out for limited-time free shipping codes or special events like National Free Shipping Day, which takes place on Dec. 14.

4. Opt for a Secret Santa with your family.

If you have a large family, buying gifts for multiple relatives can add up quickly. Suggest a Secret Santa gift exchange where every family member is assigned one person to purchase a gift for. Not only will you and your family save money, but you’ll also have the opportunity to focus on finding that one special gift that your recipient will truly enjoy.

5. Entertain at home.

With pandemic-related rules still impacting much of public life, why not skip the holiday parties and prix fixe dinners and entertain at home this year? Grab some bulk supplies and throw a cocktail party on the cheap, have friends over for a gift exchange, or host a potluck and invite everyone to bring a favorite dish.

6. Buy supplies in the off season.

One way to get lower prices on holiday items is to shop for seasonal merchandise during the off season—particularly in January when retailers are having holiday clearance or end-of-season sales. You can find toys, wrapping paper, decorations, and just about anything else if you know where and when to look. 

7. DIY your gifts.

Whatever your talent may be, there’s a good chance you can parlay it into meaningful gifts for your friends and family. Don’t be afraid to get creative and put your own spin on it. For example, if you make amazing chocolate chip cookies, why not whip up a few batches and bottle the mix in mason jars to give as gifts? Your giftee can refrigerate the mix and bake the cookies whenever they like. The options for homemade gifts are endless—you just need to find what works for you. 

8. Join a Buy Nothing group.

Buy Nothing groups are local Facebook groups that let members exchange goods and services without exchanging money. These community-based groups have become wildly popular over the last few years, encouraging people to rethink consumption, reduce mindless spending, and make use of the treasures their community has to offer.

9. Give the gift of you.

Get into the holiday spirit by giving friends and family something only you can: the gift of your time. Whether it’s free babysitting for your cousin’s kids, volunteering for your best friend’s favorite charity, or making a long drive to see a distant relative who’s never forgotten your birthday, giving of yourself just feels good—and doesn’t cost a thing. The novelist John Bunyan said, “You have not lived today until you have done something for someone who can never repay you.” Applying that mentality to the holiday season will certainly keep your spirits bright. 

Consider a Holiday Loan

If you still need help covering some of your holiday-related expenses, consider a holiday loan from LendingClub Bank. Our personal loan application only takes a few minutes to complete, and you could receive money within 48-hours on loan approval.1

Still paying down holiday credit card debt from last year? A debt consolidation loan might help you pay down your debt.

The Bottom Line

Just like any other budget, a successful holiday budget comes down to planning. And the sooner you start making your plan, the better. Committing to a cash-only budget, setting a spending limit you can stick to, and saving enough now to cover all your future holiday expenses can help you make the most of the giving season and approach the new year blissfully free of holiday debt. 

Holiday Budget FAQs

1. What’s the best way to manage holiday spending?

The best way to stay on top of your holiday spending is by preparing a holiday budget ahead of time. First set a spending limit, then divide your budget into categories and assign an amount to each category. Although you should stay within the limits of your budget, feel free to move money from one category to another if adjustments are needed. 

2. How can you avoid holiday debt?

To avoid racking up debt, commit to a cash-only holiday budget from your income, savings, and any extra cash you can make on the side. If you can’t avoid the temptation of using credit, leave your credit cards at home or in the hands of someone you trust. If you do use your cards, do your best to pay off the balance by the billing period to avoid accruing interest. 

3. How far ahead should you prepare for holiday spending?

To maximize your time, reduce stress, and make the most of your budget, start preparing for holiday spending about six months in advance of the holidays. This will give you time to plan, bulk up your savings, and take advantage of any sales or promotions during the summer months. 

4. What types of expenses do consumers need to consider when making a holiday budget?

When creating your holiday budget, be sure to carefully consider all your usual holiday expenses. In addition to gifts, your budget categories might include food, decorations, wrapping paper, gift cards, travel, transportation, and entertainment. 


Between April 2021 and June 2021, personal loans were funded within 48 hours after loan approval, on average. The time it takes for a loan to be funded is not guaranteed and individual results vary based on multiple factors, including but not limited to investor demand.

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