6 Tips for Holiday Shopping on a Budget

As the holiday season approaches, so too does the busiest shopping season of the year—with shoppers expected to spend big. 

The National Retail Federation (NRF) expects record high consumer spending this year—with people spending an average of $902 per person across gifts, food, decorations, and other seasonal items this holiday season—$25 per person more than last year, and $16 higher than the previous record set in 2019. A survey from debt.com found that 66% of holiday shoppers plan to take on debt for holiday shopping this year. 

Experts say that it is possible to shop without breaking the bank—it just requires a little planning. “You're giving your future self a gift by not overspending because of the financial stress that comes with that self-inflicted expectation that you need to do more or spend a lot on a particular item,” says Julia Lily,  founder and wealth advisor at Ryerson Financial. 

Here are some tips to make holiday shopping more budget friendly this year.

Set a budget

It’s helpful to be mindful of your spending habits year-round, but making a budget can be particularly useful around the holidays. “Create a spending plan to make sure that you have the right resources to allocate across all of those different gifting goals, versus doing what I call the close-your-eyes and swipe-the-credit-card shopping experience,” says Lily. 

To make a spending plan, Lily suggests taking stock of your fixed, monthly expenses—like rent or car payments, and “flex” expenses—like groceries or entertainment to get a sense of whether you might be able to cut back on one spending category to make room for another. Then, determine how much money you can allocate to holiday spending. 

Make a list

Before you start shopping for yourself and others, write out a list of who you’re shopping for and what you really need—and stick to it. “Just like going to the grocery store with a list makes grocery shopping so much easier, going into holiday shopping with a plan will make things easier,” says Sarah Paulson, certified financial planner and owner of Valkyrie Financial. 

Having a list can also help you stay away from impulse spending––and the anxiety that sometimes follows it, says Lily. ““Taking that time to plan for who you want to gift to can really help make the shopping experience more enjoyable and less stressful,” she says.  

Shop deals intentionally

Don’t let the temptation of a good sale pull you into an unnecessary purchase.“The first question that I always encourage you to ask is, ‘Would you still buy this if it wasn't on sale?’” Paulson says. 

Instead, use sales as an opportunity to buy items that were already on your list, and keep an eye out for price-matching services that many retailers offer. 

Look at your holiday spending patterns

According to a NerdWallet survey, 28% of shoppers who used credit cards are still paying off last year’s holiday expenses. If you found yourself overspending last holiday season, Rosario Chacón, certified financial planner and founder of Wealth-Source Financial, recommends thinking back to your purchases to get a sense of what may have caused you to go overboard. “Was it a necessity, or was it something that [you] didn't think through?” says Chacón. “This is the time to think it through.”  

If you’re prone to overspending, Chacón recommends talking through your planned purchases with a loved one to help determine what’s necessary.  

Get creative with gifts

Experts all recommend getting creative with your gifting—leaning into homemade gifts or gifts that revolve around spending time together.

“Gifts don't only have to be something that you purchase,” says Lily. 

Also, holiday presents can be a good time to gift a family member something they actually need and use in their everyday life–especially if it’s something you might end up purchasing down the road anyways. “You’re not just buying things just because you have to give a gift, but [thinking about] what does that person need.” 

And, instead of buying gifts for every co-worker or friend, consider doing a “Secret Santa” style gift exchange—in which each individual is only responsible for one gift rather than a present for everyone in the group. 

Reframe expectations

Experts say that it’s fine to be upfront about what you can and can’t afford during the holiday season. “Having more honest and frank conversations around finances would help alleviate a lot of the stress around people feeling like they need to kind of keep up with the Joneses,” says Lily. 

For young kids, instill the idea that the holidays are about traditions and not just about gifts , says Charcón. “I think that could go a long way to teach children that is not about consuming, consuming and consuming,” she says. 

And remember, it’s the thought that counts. “No person who actually loves you wants you to go into debt to give them a gift,” says Paulson.