4 Holiday Money Tips That Will Help You Stick to Your Budget

Making a holiday budget (and sticking to it) can help you and your family have a happy holiday—so you don't spend money you might regret later.

Yes, it's possible to make this a holiday they'll remember and still stick to your spending goals. It's tempting to give your kids everything on their wish lists, but as grown-ups, it's on us to deliver seasonal magic (and, of course, fun presents) without blowing the family budget.

These four steps will set you up for celebrating a December full of joy while avoiding a January financial hangover.

Spend Thoughtfully

Before you get cracking on those gifts, review your money goals for the year—and beyond. "When planning your holiday shopping, think about your long-term goals (like one day owning a car or home) and how those decisions might set you back," says Lauren Bringle, accredited financial counselor at Self Financial.

Bringle adds, "For example, if you want to build credit while saving for future purchases, consider a Self Credit Builder Account." Making on-time monthly payments into the account can help you build credit.

But be mindful with credit cards during your holiday spending. "Even if you stick to your budget, if you put all your holiday gifts on your credit card, and spend the next few years paying it off, you didn't actually save money," explains Bringle. Carrying large balances and not being able to make monthly payments on time can impact your credit score.

If you have a partner, make sure you get on the same page with them about holiday spending. "You both want the kids to have a great holiday," says Tiffany Aliche, financial educator and founder of The Budgetnista. "Figure out what each parent feels comfortable spending and negotiate. Meet somewhere in the middle." Aliche suggests putting the holiday pot in an online savings account you both see, keeping credit cards out of it, if possible. Your plan will keep you spending sensibly.

Get the Kids' Wish Lists

Choose what you like if you've got babies or toddlers. Kids who are age 3 or younger have zero expectations, and everything is new for them. But if your kid is old enough to hope for specific things and you may need to scale back this year, Sara Dunnigan, Psy.D., a psychologist in the Bay Area (and a new mom) who specializes in family dynamics, advises letting them know what to expect this year in an age-appropriate way.

If you're taking extra care to avoid spending money on something the kids don't want, you could also pinpoint each child's top gifts. Try going through a website or a catalog together so your child can rank their wishes (and practice the life skill of prioritizing wants).

Older kids are likely aware already of any penny-pinching you've been doing as a family, so honesty is the best policy with them. They'll get that you want to make any gifts you buy really count.

"Parents are afraid to talk about spending limits with kids, but saying the words out loud actually makes the concept feel less scary," Dr. Dunnigan says. It opens the door for kids to express their desires and for you to set expectations.

Mother and daughters wrapping presents and decorating a wreath at a table for the holidays
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Map Out the Gifts

Some parents like organizing their lists for kids around this classic motto: "Something they want, something they need, something to wear, and something to read." It's stood the test of time as a guide to keep adults from overbuying and to help kids focus their requests. But even if you don't follow it exactly, it's a practical starting point.

Amanda Schosid, a mom of two in Westchester, New York, celebrates both Christmas and Hanukkah, so she's already begun to plan. "We give one small gift each night of Hanukkah with a bigger gift at the end, so we've set a spending limit," Schosid says. She feels lucky that her extended family does a gift exchange where everyone buys one present, with a spending cap.

As you shop for family, look to apps and sites like RetailMeNot.com for coupons, and to tools such as Facebook Marketplace for thrift scores on jokey items like crazy Christmas sweaters. For a fun way to keep track of your gift list—and easily share with friends and family who may be shopping for your kids as well—try the app Santa's Bag, or you can also compile the most-wanted gifts on a registry website—like MyRegistry—that lets you add products from different stores.

"Make a list of all the people you plan to buy holiday gifts for, how much you plan to spend on each person, and the total budget you must stick to," advises Bringle. "Don't forget to include other expenses like holiday meals and travel too," she adds.

Since the holidays are about more than just gifts, enlist your kids to help pick out presents for Toys for Tots and similar charities, letting them start to understand generosity and the real meaning of the season. And don't forget heartfelt cards and drawings by your kids for other folks you appreciate. Says Aliche, "It's a perfect time to wish everyone a happy New Year."

Find the Joy

Seasonal experiences can also give everyone a lift. Remember when the Grinch tries to stop Christmas by taking all the packages, and it comes anyway in the form of caroling and togetherness?

Many zoos and parks will continue to have holiday light shows. Be mindful of capacity rules and book tickets ahead of time. At home, invent new traditions. "Make colored popcorn garlands and string them everywhere," Dr. Dunnigan suggests. Play holiday music and watch seasonal shows. Invite an Elf on the Shelf into your house (and find a zillion setup ideas).

Finally, think about a present to your future selves, Merrick suggests, like a little money in a 529 college-savings plan, or saving a little more toward retirement. By carefully budgeting for your holiday shopping and spending mindfully, your can give your family a season full of cheer, and start the next year off with your finances in check.

Updated by Dina Roth Port and Hiranmayi Srinivasan
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