Q. I was hoping you could help my husband and me get through the holiday season without the debt we normally have. Any advice?
A. The holidays can be expensive, but it's possible to emerge debt-free. Saving money and simplifying the holidays helps cut your stress level significantly.
Start by setting up a budget. Where I grew up, we had a saying: "Aim at nothing and you'll hit it every time." The fact is the average American family doesn't have a spending plan for this time of year. As a result, they wind up with credit-card debt that takes them until next May to pay off. To get started on your holiday budget, download the app Mint (free; iOS and Android). Don't hesitate to tweak your numbers until they seem affordable and achievable.
One of the main areas where parents tend to overspend is on toys and games. Many are afraid their kids will feel deprived or dissatisfied, or that they'll compare notes with what their friends received. In our family, we gave each child three simple toys and stressed that the holiday was about giving to others (their birthdays, by contrast, should be about them). By putting the emphasis on the true meaning of the season, you'll not only find it easier to stay on budget but will also teach your child to be centered on others, not self-centered.
Next, simplify your list. Studies indicate that if you set up a holiday list (and stick to it) you can save as much as 30 percent on your seasonal spending. Having a list not only helps you remember everyone you want to acknowledge, but it also allows you to think through your gift-giving strategy ahead of time. If you wait until you're in the throes of the season, you won't have time to be purposeful in remembering friends, family, preschool teachers, babysitters, and more. The Awesome Note 2 app ($4; iOS devices) can help with your list-making, and it also has a calendar function that lets you set task deadlines. Santa's Bag (free; iOS devices) and Christmas Gift List (free for Android devices) are two other holiday apps that can help you stay organized.
I recommend making three basic lists: gifts, baked goods or handmade gifts, and cards. Start by putting everyone into one of these three categories. Put the list away for a couple of days, then carefully scrutinize each selection. Is there someone who could get a card rather than a gift this year? Perhaps you could take someone from the gift list and make them something instead. A good rule to follow is that if you haven't heard from a person during the past 12 months, they should be removed from the gift category and placed elsewhere.
The final step is to assign price categories to the list, starting with gifts of $5 or less, then $10, $15, and so on. Add up the projected costs associated with each category (don't forget the cost of baking, crafting, cards, and postage). See what your total holiday spending will be. If the number is higher than you expect, make adjustments until your list fits your holiday budget. Then get started—the sooner you get it done, the more you can enjoy the holidays.
Ellie Kay is a family financial expert, the author of The 60-Minute Money Workout,and a mom of seven. Read more of her advice at elliekay.com.