Think you’ll have to spend a bunch to get through the holidays? Spending too much money during the holidays is easy, but with some forethought and planning, it’s possible to enjoy without blowing your budget or your credit cards to the limit. Use the three useful tips to help you stay on track financially and avoid getting sucked into the Christmas shopping frenzy.

IMAGE CREDIT: Jill Wellington from Pexels

Prepare a Budget in Advance

In an ideal world, you’d begin saving for holiday expenses in January and have a good sum ready in your savings account by October. However, this is sometimes impossible to achieve because most people rely on credit cards.

Studies show that around 40% of Americans pay for their holiday gift shopping with credit cards. And, 25% of them still owe money from the previous holiday.

Whether you use a savings account or credit card to pay for holiday expenses, having a holiday budget in place might help you avoid overspending. Consider how your Christmas spending compares to the national average. If you’ve never tracked it, now’s the time.

To figure out how much money you’ll need for the holidays, make a list of all of your regular monthly expenses and revenue.

In essence, your holiday spending budget is the money left over after you’ve paid your fixed expenses, such as your mortgage or rent, and real expenses, such as groceries.

If you’re strapped on cash this holiday season, you may want to think about charging some of your holiday expenditures on your credit card. If this is your case, set your spending limit beforehand. Consider how much you can afford to pay back in three months to avoid being buried under a mountain of debt.

Give a heartfelt and homemade gift.

Arriving at a Christmas party with a fantastic but pricey bottle of wine may appear to be the ideal gift for your hostess. On the other hand, you might get tempted to buy pricey goods for your family or friends in exchange for what they brought—to balance the somewhat ‘transactional’ dealings.

However, show your appreciation and save money simultaneously; consider giving homemade gifts this holiday season. If you’re looking for something sweet, cookies, cakes, and other baked products are excellent choices. If you’re a creative DIYer, making your jewelry, ceramics, or seasonal ornaments is a great way to save money during the holidays.

While sending a pricey gift after receiving one may seem prudent, you might be surprised how your friends and relatives will value a gift that you created using your own hands. So, start thinking and creating now—the holidays are just around the corner.

Examine Your Credit Card

While some credit cards guarantee price protection, which should help you get your funds back should the price be reduced after buying a gift, others come with attractive offers—for instance, a certain dollar amount or a percentage back on purchases above a particular threshold. For example, if you use the Amazon credit card, you can get Amazon cashback, which should finance your future purchases on Amazon.

Another method of saving is using your credit card points to purchase presents or gifts. So, use those points towards retailer gift cards, travel gift cards, and shopping gift cards, among others. However, don’t misuse the points just because they’re ‘free.’ Be wise about spending. Only use them if it’s necessary.

However, if using your credit card for holiday shopping results in a balance you can’t pay off, don’t do it; you don’t want your holiday shopping to put you in debt. One way of avoiding debt is by shopping with cash. After you’ve finalized your holiday budget, withdraw that amount from your back and stick to it. You’ll avoid overspending as well as unnecessary debts.

If cash isn’t an option—you can’t use it for online purchases—consider a prepaid card. This card should limit your spending to the sum that you loaded onto your card. As such, they’re the perfect tool for limiting your spending.

Don’t let your debt ruin your holiday cheer. Spend less money on gifts and prevent a year-round financial headache. If you follow some or most of these tips, you’ll be delighted when your holiday credit card and bank statements arrive in the next year!

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